Making the Most of $2–3 million in Retirement Savings
Advanced Strategies for Affluent Retirees
If you've accumulated between $2 million and $3 million in retirement savings, you’re in a strong position to enjoy financial security, optionality, and legacy-building potential. However, this level of wealth introduces complexities that traditional retirement advice may not fully address.
At Whalen Financial, we specialize in helping high-net-worth retirees implement strategies tailored for both sustainable income and long-term wealth preservation. Below are three advanced considerations designed for individuals and couples managing significant retirement assets.
Strategy 1: Integrating Tax Efficiency with Legacy Planning
For retirees with multimillion-dollar portfolios, tax decisions often have long-lasting ripple effects. Required Minimum Distributions (RMDs), Medicare premiums, and Social Security taxation can all compound unexpectedly—especially when tax-deferred accounts represent a large portion of total assets.
A common tax planning strategy involves multi-year Roth conversions, executed during lower-income years (often early retirement) before RMDs begin. While taxes are paid upfront on the converted amounts, the long-term benefit may include reduced RMDs, increased tax-free income, and enhanced legacy outcomes.
Additional tax-sensitive tools—such as Qualified Charitable Distributions (QCDs) or Donor-Advised Funds (DAFs)—can further support goals around philanthropy, tax mitigation, or both. For example, “bundling” several years’ worth of charitable giving into one tax year via a DAF may allow you to itemize in the contribution year while taking the standard deduction in others.
At this wealth level, tax strategy is no longer about minimizing this year’s bill—it’s about optimizing your tax exposure across decades and generations.
Strategy 2: Diversifying Income Sources for Long-Term Stability
We refer to this approach as an “Income Symphony”—a coordinated set of income streams that serve distinct roles and complement one another.
While foundational income often includes Social Security and any available pension benefits, retirees in this asset tier may consider integrating other sources, such as:
- Dividend-paying equities and bond ladders
- Real estate investments that may offer uncorrelated cash flow
- Structured notes or buffered products with defined outcomes
- Laddered annuity contracts designed to provide consistent income over time
The key lies in understanding the risk factors, liquidity, and tax implications of each income stream—and how they interconnect. For example, guaranteed income products can reduce sequence-of-returns risk and may enable more aggressive investing with the remaining portfolio.
These options are not universally appropriate and require thoughtful allocation and monitoring, but when properly implemented, they can help provide both stability and adaptability through different economic environments.
Strategy 3: Proactive Risk Management & Wealth Preservation
With $2–3 million in assets, preserving capital becomes just as important as growing it. This includes managing healthcare risks, legal risks, and market risks.
Long-Term Care
Rather than relying solely on traditional long-term care insurance or personal savings, retirees may evaluate hybrid or asset-based policies that combine life insurance with long-term care benefits. These structures can offer flexibility and may protect estate value if long-term care services are never used.
Liability Protection
At this wealth level, additional liability insurance—such as a personal umbrella policy—can help protect against risks that exceed homeowners or auto coverage. For those with legacy planning goals, certain trust structures (e.g., irrevocable trusts or family limited partnerships) may offer benefits around asset control and protection, though they require legal review and careful implementation.
Healthcare Planning
Beyond basic Medicare coverage, consider earmarking funds for premium health services, elective procedures, or unexpected out-of-pocket expenses. Maintaining liquidity for these scenarios can prevent the need to draw from long-term investment holdings during market downturns.
Bringing It All Together: A Coordinated Planning Approach
The most effective financial strategies rarely operate in isolation. Your tax plan, income strategy, and risk management approach should inform one another and evolve together as laws change and your goals shift.
For instance, a Roth conversion strategy may improve your future tax position while simultaneously enhancing your legacy plan. Meanwhile, income strategies can be designed to provide the liquidity needed for advanced healthcare or long-term care options—without disrupting investment growth.
This kind of integration is where planning becomes powerful—and why affluent retirees often benefit from working with a team that understands how to connect each piece.
The Bottom Line
Retiring with $2–3 million offers tremendous flexibility and opportunity. But to truly maximize what your wealth can do—for your lifestyle, your loved ones, and your legacy—it’s important to go beyond one-size-fits-all advice.
At Whalen Financial, we serve as fiduciary partners for individuals and families who want to be proactive, thoughtful, and strategic with their wealth. If you're ready to explore how tailored planning can align with your unique goals, we invite you to connect with our team.
Disclosures:
Whalen Financial is an SEC-registered investment adviser. Registration does not imply any specific level of skill or training. This communication is intended for informational and educational purposes only and should not be construed as personalized investment, tax, or legal advice. All investment strategies involve risk, including the potential loss of principal. Past performance does not guarantee future results.
Any scenarios or outcomes described herein are hypothetical and used for illustrative purposes only. Individual results will vary. Tax laws and regulations are subject to change; consult with a qualified tax advisor regarding your specific situation.
