Got $2M saved for retirement? Get ready for everything to change, and not always for the better. Dodge 5 money traps now

If you have $2 million in retirement savings, congratulations. That’s well above the $1.26 million that Americans believe is needed to retire comfortably, according to a 2025 Northwestern Mutual study (1).

At this point, you have probably overcome the challenge of saving enough. Now, your next mission is wealth preservation. Higher taxes and the wrong lifestyle choices can quickly erode what seems like a huge treasure trove.

Must Read

Shifting your perspective from building wealth to protecting it isn’t easy. But the journey could be less treacherous if you avoid these five common money traps that high-net-worth individuals sometimes fall into.

1. Not knowing your true lifestyle budget

If you follow the 4% rule, $2 million in retirement savings would give you $80,000 a year, adjusted for inflation. That could either be too much or too little, depending on where you live and how much you spend.

Lifestyle inflation — where your spending habits change with the size of your portfolio and paycheck — is a real risk. It’s perhaps one of the reasons why only 36% of American millionaires, according to Northwestern Mutual, consider themselves “wealthy.”

Among these millionaires, those who don’t work with a financial advisor feel less prepared for retirement and expect to retire two years later than those who do. In other words, some high-net-worth individuals haven’t taken the time to properly plan their retirement budget and timeline.

While $2 million sounds like a lot, it can quickly disappear and might not be enough for everyone.

Read More: Almost 50 with no retirement savings? Here’s why you don’t have to panic

2. Tax time bombs in IRA or 401(k)

If much of your wealth is in tax-advantaged retirement accounts such as 401(k) plans and IRAs, you need to prepare for the tax consequences of making withdrawals in retirement.

In 2024, less than half (49%) of millionaires without a financial advisor told Northwestern Mutual they consider how much taxes could eat into their retirement savings (2). Without a proper forecast of these taxes and a strategic plan to minimize taxes, you could end up with a thinner-than-expected safety net in retirement.

Work with an expert to see if you can pull off strategies such as Roth conversions or tax gain harvesting to minimize these costs.

In these cases, working with a financial advisor can help reduce costly mistakes.

If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.

Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.

From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.

You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.

WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.

3. Wrong asset allocation

With $2 million in retirement savings, you have more capacity to take risks than the average investor. But that doesn’t necessarily mean you should.

The best approach is generally somewhere between aggressive growth and conservative fixed income. Finding the right balance for you will depend on your age, risk appetite and target returns.

Most millionaires seem to understand this. According to investment firm Kohlberg Kravis Roberts, people with between $1 million and $30 million in liquid assets typically have 2% of their portfolio in cash, 22% in alternative assets, 33% in fixed income, 15% in international stocks and 28% in domestic stocks (3).

Investing across different asset classes and countries stabilizes your multimillion-dollar portfolio so that an economic crisis in a country or a correction in any specific market doesn’t derail your retirement plans completely.

Gold has served as a store of value for thousands of years. It isn’t tied to any single country, currency, or economy, and it can’t be printed like fiat money.

Investors often flock to it during periods of economic stress or geopolitical uncertainty — pushing prices higher. Gold prices have more than doubled over the past five years, hitting multiple record highs along the way and outpacing the S&P 500 over the same period.

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.

To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.

4. Exotic assets

As a multimillionaire, you may be tempted by seemingly exotic asset classes typically reserved for the ultra-wealthy. Private equity funds, litigation finance, music royalties, private credit funds and hedge funds might reach out to seek some investment from you.

Despite their eye-catching marketing material, these types of alternative assets aren’t all that, suggests research by retirement investment consultant Richard Ennis.

According to Ennis, from 2008 to 2024, the average alternative asset underperformed a simple passive index fund composed of stocks and bonds, primarily because of their high fees (4).

Simply put, you don’t need fancy investment strategies.

However, if you’re looking for solid alternative investments, real estate is worth a second look.

Rental properties have long been a proven source of steady, passive income for high-net-worth investors — so it’s no wonder that real estate accounts for nearly 25% of the typical family office portfolio (5).

However, the time, effort and costs involved in managing and maintaining multiple properties prevent many from investing. So unless you’re a hedge fund titan or an oil baron, you’ve probably been shut out of one of the most profitable corners of the market.

That’s where mogul can come in. This real estate investment platform offers fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.

Founded by former Goldman Sachs real estate investors, the mogul team handpicks the top 1% of single-family rental homes nationwide for you. Simply put, you can invest in institutional quality offerings for a fraction of the usual cost.

Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.

Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.

Another avenue is to look at different slices of the real estate vertical.

Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT’s direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.

5. Legacy blind spot

If your portfolio exceeds $2 million, your wealth might surpass what you consume in retirement. In other words, you may leave money behind for your children and loved ones.

It would be wise to legally document how you want your assets to be distributed when you pass — and to take this step as soon as possible.

A surprisingly high number of wealthy people do not have a will or a formal estate plan. When Northwestern Mutual asked its high-net-worth respondents in 2024 whether they had a will, 29% said they didn’t.

That may be why 70% of wealthy families lose their wealth by the second generation, and 90% by the third (6). But by taking steps to preserve your wealth — and teaching your heirs to do the same — you can help keep your nest egg safe for generations to come.

With $2 million or more saved, you’re in a strong position for a comfortable retirement — but a few tax or spending mistakes could quickly change that. Avoid these five common traps and your golden years should be a lot smoother.

What To Read Next

• Robert Kiyosaki issues grim warning for baby boomers. Many could be ‘wiped out’ and homeless ‘all over’ the country. How to protect yourself now

Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see oureditorial ethics and guidelines.

Northwestern Mutual (1), (2); SmartAsset (3); Bloomberg (4); Knight Frank (5); PWM (6)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.