What is Wealth Acceleration? Multi-Generational Planning

“Wealth accumulation” is a term you hear a lot as a financial advisor, usually when talking about retirement planning. It’s a simple term, one you’re likely familiar with. It’s focused on having enough assets to stop working and make sure your last check doesn’t bounce.

For many families, “enough” is the pressing question. But what do you do when “enough” isn’t a question anymore?

Today, we’re highlighting the conversation of what lies beyond accumulation. 

Casting a Bigger Vision Than “Enough”

If I were to visualize the average American retirement plan, it would look something like this chart.

In this equation, we just want to know how much wealth we need and how long it will sustain us when we stop working. While it serves a needed purpose, it doesn’t give us any insight into what to do with abundance. It gives no compelling vision of impact or investing in the next generation.

I think this is part of the reason why so many families who create 1st generation wealth see it dissolve in generations 2 and 3. You might have heard the stat that 70% of 1st generation wealth is gone by Gen 2 and 90% is gone by Gen 3. When your vision is centered around enough for you, it casts no vision for impact and legacy.

Our Favorite Term: Wealth Acceleration

The alternative we prefer to talk about is wealth acceleration. Acceleration rejects an assumption in the American retirement system: once you are able to retire, you stop growing your wealth.

Acceleration seeks ways to continue growing your wealth, even if you choose not to continue working. It also seeks to use your financial success as a launch pad for generations 2 and 3. I would chart it as something like this. 

The Goal: Financial Independence

Begin with the permission to dream bigger. Our dream for our clients is NOT for you to work for years at a job you hate so you can someday retire and (finally) rest. This is why we talk about financial independence, not retirement.

It means your goal is the freedom to do the things you love with the people you love without depending on a salary. That looks different for every person, but we see clients use their freedom to:

• Exit their career and move closer to grandkids
• Move from 80 hours a week to part-time consulting with 20 hours a week and more peace
• Continue working past what they need so they can fund more high impact giving

These clients are funding their freedom through a variety of channels. Like most people, many pull from traditional investment vehicles like Roths, 401(k)s, pensions, etc. Some enjoy income streams from business ownership, even after stepping away from operations. We have a number of clients that also benefit from cash flows from real estate portfolios.

There’s more than one way to fund your long-term freedom. How you use your freedom is fully up to you. Whatever your highest sense of fulfillment, we want to help you fund it.

Multi-Generational Planning

The other distinction of acceleration is that we are broadening our view of wealth from our lifetime to include our kids, their kids, and beyond. How can we use our wealth to set our kids up for success?

Once we know we have enough for our futures, how can we snowball our financial strength as a family to launch generations 2 and 3 and beyond.

I’ll give you one example of this from my own life. Mae and I fund Roth 401(k)s that we hope to never touch. Why? Because that money is growing tax-free, hopefully for the next 30-40 years of our lifetime. Once we pass, our kids have 10 years to access it. 

Our hope is that in the time between, we can build them up so they have their own financial strength, streams of income, and everything else they need to be successful. Better yet, they can contribute to what we started for their own 30-50 years, tax free.

Can you imagine a family safety net made up of 100 cumulative years of tax-free growth? What could that enable the next generation to do? What business ideas could they pursue? What charitable impact could they have?

This is what we’re talking about when we say acceleration. How can we use financial planning to accelerate the success of generations coming behind us? 

What Would You Envizion?

This is all fun to talk about, but I would highly recommend you take some time to think about what you would plan for with the abundance you have. If you’re married, ask your spouse the same questions.

• What would you do if income wasn’t a concern?
• What would you continue doing?
• What would you stop doing?
• What in your life brings you the most purpose and contentment?

We love to challenge our clients with these questions. They bring the big dreams into focus, and together, we can pursue them with passion and clarity.

If you are looking for someone to help you Envizion More in your life, lifestyle, and legacy, we would be honored to have a conversation. You’re our kind of people.