Financial Experts Advise Retiree on Asset Consolidation and Risk

A 56-year-old individual with a net worth exceeding $2 million and $1.4 million in retirement savings is seeking professional guidance to retire within five years. The individual is weighing the feasibility of living in high-cost states like California, New York, or Massachusetts, or spending several months per year abroad.

Michael DeMassa, founder of Forza Wealth Management, advises the individual to begin by creating a detailed asset inventory to facilitate the consolidation of multiple 401(k) and brokerage accounts. Scott Bishop of Presidio Wealth Partners suggests organizing these accounts by their specific purpose—categorizing them into near-term spending, intermediate income, and long-term growth—rather than by the institution holding the funds.

To address the risk of market downturns, experts recommend maintaining a liquid reserve equal to approximately one year of expenses. This strategy aims to mitigate sequence-of-return risk by preventing the need to withdraw from retirement investments during market crashes. Additional planning focuses on managing health insurance costs until the individual reaches age 65.