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The Really Rich Journal

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The Weekly Tone

There always seems to be a certain myth floating around: the notion that high-net-worth-individuals (HNWIs) have their financial lives perfectly sorted out, especially when it comes to retirement planning. The sobering truth, however, is that many of these individuals, while rich in assets, haven't adequately planned for retirement.

I've discovered this over countless conversations, and it continues to baffle me.

They don’t have much more planning than the average Joe.

In the late 1970s, the 401k was introduced, a seemingly innocuous change that essentially transferred the responsibility of retirement planning from the company to the individual.

This is enormous.

Previously, pensions were the norm, a guaranteed income for life paid by your employer.

You couldn’t screw it up.

The 401k, however, handed over the reins of active portfolio management to people who were already occupied with their jobs, often with little to no financial expertise.

This has been a bit like asking your plumber to perform heart surgery - it's not their area of expertise, and the results could be, well, deadly. And I have a great plumber.

Even more comical, there’s time pressure to make your investment decisions during an enrollment period. You’re rushed through it.

The allure of "being in control" of one's investment strategies has proven to be a mirage for most. The reality is, average employees are not equipped to manage a fluctuating portfolio, understand investment strategies, or have the time to monitor market changes continually.

Most people I talk to (or anyone on my team for that matter) don’t even know what’s in their 401(k).

So, what's the alternative?

One option, often overlooked, is annuities. Yes, I’m biased—I built a company around this.

These financial products, built by insurance carriers, accumulate cash then can provide a regular income stream, much like the old school pension. They can offer a way to secure a stable income during retirement, taking the guesswork out of portfolio management (because they can’t lose money). But, annuities are complex and not suitable for everyone, so they should be evaluated with the help of a trusted pro like, ahem, Revise (you’ll even meet with me directly if you’re high-net-worth).

Another approach is to seek professional investment advice, primarily if your wealth has accumulated significantly—that means having someone else actively manage your money. Rather than trying to manage your portfolio yourself, a financial advisor could provide essential insights and guide you through the process.

Moreover, investing in real estate or creating other uncorrelated streams of passive income can also serve as practical alternatives. These strategies require time and know-how but can yield significant returns if done correctly—personally real estate isn’t my thing, so I stick with financial assets.

The key takeaway is this: don't be lulled into a false sense of security by the 401k narrative. It's not sufficient to merely passively contribute and hope for the best.

Let me be the one to shock you: wealth doesn't equate to financial wisdom.

Many high net worth individuals have much to learn regarding retirement planning and that’s okay. Perhaps it's time to rewrite the narrative, step away from the status quo of the 401k and rethink what “everyone else” is doing when it comes to retirement.

🎙️ This Week On The Really Rich Podcast

Who better to learn about the Wild West of entrepreneurship from than my very own Co-Founder and CTO, Michael Panik? On this episode, we take a light romp through the world of building tech people actually want to buy, fundraising, and what to do with all the money should we every be lucky enough to get any.

Podcast available on YouTube, Spotify, and Apple Podcasts.

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Rich: That’s common knowledge!

Really Rich: Common knowledge is usually wrong.

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