Yahoo Finance 8 Things the Rich Have To Worry About That Poor People Don’t
No matter your socioeconomic status, you’ll always have financial concerns. Naturally, those with significant wealth will have different problems than those with lower incomes.
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“As someone who has navigated the insurance industry for decades, particularly in high-net-worth sectors, I understand that wealthy individuals must contend with financial considerations that the less affluent typically do not face,” said Griff Harris, certified insurance counselor and president of Griffith E. Harris Insurance Services.
Here are some of the things the rich likely worry about that those with fewer resources don’t.
Asset Protection
“I’ve seen the unique financial concerns that wealthy individuals face,” said Ben Klesinger, co-founder and CEO of Reliant Insurance Group and Helping Hand Financial. “High-net-worth individuals often need to address comprehensive asset protection.
“Unlike standard personal insurance, high-value assets such as luxury homes, exotic cars and art collections require policies specifically designed to cover the risk of loss or damage to these unique items. A personal floater or scheduled coverage is essential to ensure adequate protection for these high-value possessions.”
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Liability Coverage
In addition to asset protection, Klesinger said high-net-worth individuals are more susceptible to litigation risk, necessitating more extensive liability coverage.
“Umbrella liability insurance is crucial for safeguarding against substantial legal claims,” he said, “oftentimes triggered by the higher visibility and perceived wealth of affluent individuals.”
He said this type of coverage extends beyond standard home and auto policies, covering broader liabilities and higher limits to mitigate potential financial devastation from lawsuits.
“Moreover, the risks associated with employing domestic staff are higher for wealthy families,” he said. “Injuries to domestic employees or claims of wrongful termination can result in significant out-of-pocket expenses and lawsuits. Employment practices liability insurance can help cover medical expenses and legal costs, protecting the homeowner’s financial interests.”
He said these specialized insurance needs exemplify why affluent individuals must adopt proactive approaches to risk management that less affluent individuals may not require.
Private Security
Wealthy individuals often need to invest in personal security for themselves and their families, said Rhett Stubbendeck, CEO and founder of Leverage Planning.
“This includes hiring security personnel and installing advanced security systems at their homes,” he explained. “A client of mine had to enhance their home security after a high-profile incident.”
Tax Planning
According to Stubbendeck, with significant assets and income, wealthy individuals must engage in detailed tax planning to manage their tax liabilities.
“This often means hiring specialized tax advisors and accountants,” he said. “I spend a lot of time helping clients navigate complex tax regulations to minimize their tax burdens legally.”
Managing Family Wealth
“Wealthy families face the challenge of responsibly transferring wealth to future generations,” said Ethan Keller, president of Dominion.
This includes navigating complex tax laws, ensuring heirs are financially literate, and planning for long-term wealth management.
“Professional guidance is sometimes essential, even though it is often expensive,” he added. “With limited assets, inheritance processes are simpler, and wealth management strategies are often unnecessary.”
Staying High Net Worth
While a higher income affords a more comfortable lifestyle, wealthy individuals face the challenge of lifestyle inflation, Keller pointed out.
“As their income grows, so do their expenses for maintaining a certain standard of living, including larger homes, luxury cars and exclusive memberships,” he said.
He said this can make it difficult to save and accumulate wealth at the same rate as their income increases.
“Those with limited means often have a more fixed cost of living,” he added. “Their expenses are less likely to inflate proportionally with their income, allowing for a higher saving rate.”
Being Viewed as Cheap
“Although it sounds vain, rich people spend a lot of money on not being viewed as cheap,” said David Bakke, financial expert at DollarSanity. “You’d be surprised at how many rich folks are insecure about their richness, so to speak, and they readily spend money in that name.
“Having a boat in the driveway or being dressed in the best clothes means a lot to them, even though it shouldn’t. Keeping up with the Joneses is very much alive and well with the wealthy.”
Financial Advice
According to Bakke, poor people rarely pay for financial advice because they don’t need it and can’t afford it.
“It is a must for the rich,” he said. “They need advice on taxes, investment decisions, retirement withdrawals and a whole host of other categories. In short, it costs a lot of money to be rich.”
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This article originally appeared on GOBankingRates.com: 8 Things the Rich Have To Worry About That Poor People Don’t
