Marc Russell
Founder, BetterWallet, LLC
Many wish to build generational wealth, but don’t know where to start. Read more for tips to make money work for you.
Generational wealth 101
Generational wealth, or the passing of income-producing and non-income producing assets to the next generation, can be achieved by making a significant amount of money over a short period of time or making a significant amount of money over a longer period of time, and efficiently passing that wealth to the next generation.
Accounts used to accumulate generational wealth
Most get there by consistently contributing to their retirement accounts. Most companies offer what they call an “employer match,” where the company will match your retirement contributions up to a certain percentage.
This key benefit can tax-efficiently accelerate your retirement savings and help you reach your retirement goals quicker. When you retire, your retirement assets (401k, 403B, etc.) can be used for living expenses until the day you pass. Retirement accounts serve as major conduits for generational wealth.
Benefits of life insurance
Life insurance plays a big role in building generational wealth. Life insurance is a contract between an insurer and the insured, where the insurer guarantees a certain sum of money in exchange for periodic premium payments. Life insurance is typically used by families who have beneficiaries who rely on their income to survive.
What most people overlook is one of the biggest tax advantages in the tax code, specifically Section 7702 –– the tax-free death benefit. This tax-free death benefit is one of the biggest reasons why families who seek generational wealth have life insurance policies.
At base level, building wealth comes down to the simple things. Using the right investment vehicles, contributing to those vehicles early and often, and leveraging professionals to help you efficiently transfer your wealth.