Strategies for Wealth Preservation: Safeguarding Your Financial Future

While wealth accumulation is about growing your assets, wealth preservation is about protecting what you’ve built. It’s how you ensure your wealth supports you in retirement and helps you leave a legacy for the next generation.

As the cost of living rises and economic uncertainty grows in the United States, wealth preservation is only becoming more vital. As of 2024, 50% of Americans—including nearly 60% of millennials—say an inheritance is critical to their ability to retire comfortably.

With that in mind, let’s explore seven strategies to help you build a comprehensive wealth preservation plan.

7 Wealth Preservation Strategies

1. Maintain Healthy Financial Habits

Like wealth creation, wealth preservation begins with a strong foundation of healthy financial habits. Advanced tactics won’t get you very far if your day-to-day money decisions work against you.

Before you implement more sophisticated wealth preservation strategies, master the basics, like:

• Maintaining a balanced budget
• Avoiding unnecessary debt
• Reviewing financial plans regularly
• Adopting a long-term investing perspective

These may not be the most exciting aspects of financial management, but they’re often the difference between progressing and backsliding. For example, these fundamentals can help you stay on track through major life changes, avoid lifestyle creep, and stick to your investing strategy during market downturns.

2. Diversify Your Investments

Diversification is a fundamental wealth preservation strategy that involves incorporating variety into your investment portfolio. Rather than putting all your eggs in one basket, you spread your investments across different assets, asset classes, regions, and vehicles with distinct characteristics.

Diversified portfolios help reduce your exposure to any single risk. If one part of your portfolio generates losses due to a specific event, your uncorrelated assets may remain stable—or even react positively—mitigating the damage to your position.

“Many clients don’t realize that diversification isn’t just about owning more stocks; it’s about owning the right mix of assets that respond differently to the same event,” said Melody Townsend, CFP, founder of Townsend Financial Planning.

Some examples of diversification include:

3. Manage Risk Through Insurance

There are more threats to your wealth than negative investment returns, and even the most well-crafted portfolio can’t shield you from them all. For risks like unexpected medical expenses, lawsuits, or untimely death, insurance is often your best line of defense.

If others rely on your income—such as a spouse, children, or aging parents—life insurance is often the place to start. Term life policies are affordable and designed to protect you during your peak earning years. Whole life policies may cost more, but can also better support legacy goals and sophisticated tax strategies.

Disability insurance can be another invaluable safeguard, offering income protection if illness or injury prevents you from working. Look for own-occupation coverage, which provides benefits if you can’t perform the specific duties of your job, even if you find work in another profession.

Umbrella insurance—which adds liability protection beyond standard home and auto coverage—is also something to consider as your wealth grows. “Umbrella liability insurance is a big one that often gets overlooked,” said Charles Petitjean, CFP, of Barker Wealth Management. “For affluent households, a lawsuit can become a major financial threat.”

Petitjean also recommended coupling traditional health insurance—essential for guarding against unexpected medical expenses—with long-term care (LTC) insurance, which can help cover the cost of nursing home and in-home care for older adults.

“People underestimate the likelihood and cost of needing LTC in retirement,” said Petitjean. “Something like 60%–70% of people will need LTC at some point. I’ve seen sizable portfolios whittled down to nothing over just a few years of paying for assisted living or in-home care.”

4. Optimize Your Tax Strategy

Taxes can steadily erode your wealth if left unchecked, but you can greatly reduce their impact over your lifetime with proactive planning.

Tax-advantaged accounts—such as 401(k) plans, individual retirement accounts (IRAs), and health savings accounts (HSAs)—are among the most powerful tools for long-term tax optimization. Depending on the type, these investment vehicles can offer benefits like:

• Tax deductions for contributions
• Tax-free growth while invested
• Tax-free withdrawals in retirement

A key part of retirement planning is strategically balancing your contributions across these accounts to minimize your total lifetime taxes. Placing the right types of investments in each type of account is also an opportunity for savings, as it can help you reduce tax drag.

Because the tax code is complex and constantly evolving, working with professionals like a certified public accountant (CPA) or a certified financial planner (CFP) can help ensure you’re making the most of all available tax deductions, credits, and strategies. This becomes especially valuable as your finances become more complex, such as when you start a business, invest in real estate, or prepare for retirement.

For example, Petitjean and Townsend both highlighted Roth IRA conversions—which involve transferring funds from a traditional retirement account to a Roth IRA—as one of the most lucrative strategies they help clients execute.

“Strategic Roth conversions—especially in the early retirement years before RMDs kick in—are incredibly effective,” said Petitjean. “These are often clients’ lowest tax years, so we can shift money from tax-deferred to tax-free at a reduced cost.”

Meanwhile, Townsend said, “We call it filling up the ‘low tax bucket.’ It’s an area where we regularly find six-figure savings over time, but it requires proactive planning.”

5. Engage in Estate Planning

To protect your wealth over the longest term, you need a strategy for transferring it to the next generation. While often seen as something reserved for the ultra-wealthy, this is actually a critical component of wealth preservation at all levels. “If you love someone or something, you need an estate plan,” said Townsend.

Estate planning is the process of deciding how your assets and obligations will be handled if you pass away or become incapacitated. “It’s the ultimate form of long-term wealth preservation,” Petitjean said. “A good plan does more than distribute assets—it ensures your wishes are honored, taxes are minimized, and your legacy is protected.”

Building an estate plan can be an extensive process, but here’s a checklist with some of the most important steps:

• Make a comprehensive list of assets and debts
• Designate beneficiaries on retirement accounts and insurance policies
• Set up joint accounts with benefit of survivorship alongside your spouse
• Create a will that outlines your wishes for your assets, dependents, and pets
• Appoint an executor for your will and grant someone power of attorney (POA)

For the highest level of control over your affairs, consider setting up a trust. “I often recommend revocable living trusts for clients who want control, privacy, and a way to avoid probate,” said Petitjean. “Trusts can also tailor how assets are distributed—for example, protecting beneficiaries who may have special needs or financial challenges.”

However, both limits are set to drop significantly in 2026 when the Tax Cuts and Jobs Act provisions sunset, making now a smart time to take action.

6. Plan Business Successions in Advance

If you own a business you’d like to preserve after you exit, start thinking about succession planning well before you’re ready to retire. Whether you plan to sell the company or pass it to a family member, completing a smooth transition often takes more time than you expect.

“Start planning your exit no less than five years before you think you’re ready,” said Joshua Mangoubi, CFA, founder of Considerate Capital. “The most successful transitions I’ve seen—both financially and personally—happen when there’s time to be thoughtful and strategic.”

Effective succession planning can be a multi-year process involving sophisticated financial strategies. “That might include exploring an employee stock ownership plan (ESOP), setting up a cash balance plan to maximize deductions, or seeing if your business qualifies for the Section 1202 exclusion, which can eliminate taxes on up to $10 million—or 10 times your basis—in capital gains,” said Mangoubi.

Even when the financial side is relatively straightforward, your intended successor may not want to inherit the business. Alternatively, they—or the rest of your company—may need several years of training to prepare for the transition. “Too many businesses become worthless without the founder because they never built systems or a management team to operate independently,” said Petitjean.

Ultimately, the sooner you begin, the more options you’ll have, and the more wealth you’re likely to preserve.

7. Teach Children Financial Responsibility

One critical wealth preservation strategy that’s often overlooked is preparing your children to manage the estate they inherit. Giving them a strong financial education can be the difference between building a lasting legacy and seeing your hard work disappear in a single generation. “The goal is to raise good stewards, not just heirs,” said Townsend.

Modeling good financial habits is valuable, but hands-on lessons may be the most effective strategy. “One simple but powerful method I recommend is the ‘three-bucket’ system—dividing allowance or income into spending, saving, and giving,” Petitjean said. “As kids get older, parents can gradually introduce budgeting responsibilities, starting small and building up.”

In addition, make sure your children understand in advance what they’ll eventually inherit, especially if that includes a business or alternative assets like real estate. That opens the door to transparent conversations, giving both parties a chance to ask questions and clarify expectations.

The Bottom Line

A wealth preservation plan is essential for protecting the assets you work hard to accumulate. By combining healthy financial habits with defensive strategies—like diversification, relevant insurance, and tax optimization—you can help ensure your wealth supports you in retirement and passes on to future generations.

It’s never too soon to start thinking about wealth preservation, and it becomes more important as your assets grow. Build your plan early and revisit it regularly to stay on track. As retirement approaches, consider working with experts—like CPAs, attorneys, and financial advisors—to help you navigate more complex areas, such as business succession and estate planning.