Those who want to preserve and grow their wealth over multiple generations must understand the implications of longevity. With life expectancy rates on the rise, many ultra-wealthy individuals are contending with increasingly complex financial concerns that require substantial foresight and strategic planning. In this article, we’ll delve into some of these considerations and discuss how ultra-high-net-worth (UHNW) individuals and others can help secure their future financial security – and that of their family – despite the expectation of living longer.
More Generations May Have to Share the Family Wealth
Not long ago, it was standard to have three, or at most four, generations of a family living at once. Today, however, the dawn of a new era is upon us: because people are living longer, it’s more common to have four or more generations sharing the family wealth. The implications of this shift are substantial and far-reaching. As more generations beyond the Baby Boomers start retiring, disability issues and costs will likely become more pressing, taxes may rise because of the need to fund greater longevity costs across all age groups, and conventional wealth planning may become stretched thin with multiplied demands on likely limited resources. This multigenerational issue may trigger complex questions about how a family should fairly distribute its assets. Many experts agree that thoughtful wealth planning (the kind that considers everyone involved across multiple generations) can help facilitate strong family relationships and smart financial decision-making.
How the Ultra-Wealthy Might Tackle the Issue of Longevity
While everyone’s financial circumstances are different, here are a few of the ways UHNW individuals might choose to adapt to the increase in life expectancy:
Reworking Their Financial Plans
In the past, many people with great wealth focused primarily on preserving it and passing it on to future generations. While this is still important, when the lives of those “future generations” end up overlapping with the originator of the wealth, those goals may have to change. It may become necessary to put the family’s money to work during the wealth owner’s lifetime as opposed to simply preserving it. There might also be a need to generate new sources of wealth creation. Ultimately, the super wealthy may need to altogether rethink their financial plans.
Collaborating with an Advisor
A trusted financial advisor can help families think holistically about their finances, in addition to encouraging discussion around sensitive topics that are sometimes considered taboo (dying, end-of-life care, funeral planning, etc.) The right advisor can also assist in crafting a financial plan that takes longevity into account, including its challenges and potential opportunities too. Longevity and its financial implications should be an ongoing topic of conversation amongst family members across all generations.
As people live longer, maintaining, growing, and passing along intergenerational wealth may require more than just traditional forms of planning. Due to all the complexities that come along with longevity, working with an experienced financial advisor may ultimately be the best way for someone to determine what steps they should take in this context. With an advanced appreciation and understanding of this topic, individuals can potentially implement effective and proactive strategies tailored to their circumstances that will hopefully enable them to accomplish their long-term financial goals. By being well-informed, UHNW individuals may be able to anticipate potential issues caused by longevity as they build practical solutions into their financial plans.
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