Wealth Preservation Strategies: Complete Guide

Understanding wealth preservation vs. wealth protection

Emergency funds build your financial foundation

Your wealth preservation journey starts with a solid emergency fund. This liquid safety net protects your long-term investments from unexpected expenses.

Emergency fund amount: 3 to 6 months of expenses

Financial experts recommend saving three to six months of living expenses. Recent data from Bankrate show that 85% of Americans agree that this amount would make them feel financially secure, but only 46% have actually saved this much.¹

Start with your specific situation:

• Single with a stable job: Three months of expenses may be sufficient.
• Married with dependents: Six months or more provides better security.
• Variable income or job uncertainty: Lean toward 6+ months.

Best accounts for emergency savings

Store emergency savings in high-yield savings accounts or money market accounts. These provide quick access while earning interest, helping combat inflation.

Avoid investing emergency funds in stocks or bonds. When emergencies strike, you need guaranteed access to your money regardless of market conditions.

How to build your emergency fund in 5 steps

Step 1: Calculate your monthly expenses

Add up all your recurring monthly costs: rent/mortgage, utilities, groceries, insurance, transportation, debt payments and other regular expenses. This is your baseline.

Step 2: Multiply by the number of months you’ll need

• Single with a stable job: Multiply by 3
• Married with dependents: Multiply by 4–6
• Variable income or recent job change: Multiply by 6-12

Step 3: Open a high-yield savings account

Choose a high-yield savings account with a competitive rate.

Step 4: Automate your savings

Set up automatic transfers from checking to savings. Start with any amount that fits your budget—even $50-100 per month—and watch how it builds. Many banks and credit unions, including Associated Bank, offer services for you to move funds on a schedule you specify.

Step 5: Avoid temptation to invest too early

Keep emergency funds separate from investments. This is money that needs to be available immediately if a situation arises.

Goal-based investment strategy

Defining specific financial goals creates a roadmap for effective wealth management. Goals help you align your time horizon with your asset allocation, ensuring you take on the optimal level of risk.

Conduct a financial gap analysis

Start with a comprehensive review of your current situation versus your future needs:

Current financial position

• Present income and anticipated growth
• Current market value of savings and investments
• Expected Social Security benefits

Future requirements

• Income needed for desired retirement lifestyle
• Target retirement age
• Major expenses like healthcare or legacy goals

The difference between where you are now and where you need to be is your "gap." Your wealth preservation strategy should include a specific plan to bridge this gap.

Asset allocation strategy

Definition: Asset allocation

Asset allocation refers to the way you divide your money among different types of investments (stocks, bonds, cash, etc.). Your allocation should match your time horizon and risk tolerance. A younger investor might have 80% stocks and 20% bonds, while someone near retirement might have 40% stocks and 60% bonds.

Your mix of stocks, bonds and cash significantly impacts your success. Too conservative, and you risk falling short of your goals. Too aggressive, and you might suffer losses that are difficult to recover from within your timeline.

A qualified Associated Bank wealth advisor can help determine if you're on track to meet your goals and what adjustments you need to make.

Maximize tax-advantaged retirement accounts

Tax-efficient savings form the backbone of most wealth preservation strategies. Different account types offer various advantages, depending on your employment situation and income level.

2026 retirement account contribution limits at a glance

Action Item: Max out your highest contribution limits first. A 401(k) offers the most annual savings potential.

Individual retirement accounts (IRAs)

Bottom Line: A Roth IRA is often better for most after-tax contributions because of tax-free growth and no required withdrawals. A traditional IRA is better if you want an immediate tax deduction.

Roth IRA

Roth IRAs are retirement accounts funded by money you contribute after taxes, but all growth and withdrawals in retirement are completely tax-free. Unlike traditional IRAs, there are no required minimum withdrawals. The 2026 contribution limit is $7,500 ($8,600 if age 50+).

Non-Deductible IRA

• For high earners who exceed Roth income limits.
• No upfront tax benefit, but tax-deferred growth.
• Can be converted to a Roth IRA through a "backdoor" strategy.

Employer-sponsored plans

401(k) contribution limits for 2026

• Employee contribution limit: $24,500 annually
• Catch-up contribution for 50+: Additional $8,000
• Many employers offer matching contributions.
• Highly compensated employees may face additional restrictions.

Nonqualified deferred compensation (NQDC)

• Allows deferring much larger portions of compensation.
• Available to executives and highly compensated employees.
• Requires careful planning for deferral strategy and distribution timing.
• Higher risk but greater tax deferral potential.

Retirement plans for the self-employed

SEP-IRA (2026 limits)

• Contribution: Up to 25% of compensation or $72,000, whichever is less.
• Ideal for self-employed individuals and business owners.
• Must contribute equally for all eligible employees.
• Simple administration compared to other business plans.

Solo 401(k)

• Higher contribution limits than SEP-IRA for solo entrepreneurs.
• Can contribute as both employee and employer.
• No income restrictions.
• Perfect for self-employed individuals with no employees.

SIMPLE IRA

• Good for small businesses wanting flexible contribution methods.
• Lower contribution limits but easier administration.
• Employer matching requirements.

Advanced tax-efficient strategies

Beyond retirement accounts, sophisticated investors can use additional strategies to minimize taxes and preserve more wealth.

Tax-loss harvesting

A tax-loss harvesting strategy involves selling securities at a loss to offset capital gains in other investments. This reduces the taxes you owe. You can reduce capital gains taxes and deduct up to $3,000 of ordinary income annually using unused losses.

Key rules to follow:

• Use short-term losses first to offset short-term gains that are taxed at higher rates.
• Avoid wash-sale rules by waiting 30 days before repurchasing the same security.
• Consider tax-loss harvesting during portfolio rebalancing.

The wash sale rule

The IRS’s wash sale rule prevents you from writing off an investment loss if you buy the same (or very similar) investment within 30 days before or after the sale. Wait 30 days before repurchasing to protect your tax deduction.

Example: If you have $10,000 in capital gains but also $7,000 in losses from underperforming stocks, you can offset those gains and only pay taxes on $3,000.

How to execute tax-loss harvesting

Follow these steps to use tax-loss harvesting in your portfolio.

Step 1: Identify underperforming investments

Review your portfolio quarterly or during rebalancing. Look for positions where the current market value is lower than what you paid. These are candidates for tax-loss harvesting.

Step 2: Calculate your net gains and losses

Add up all your capital gains (profitable sales) and losses for the year. If your total gains exceed your losses, you have tax-loss harvesting opportunities.

Step 3: Determine how much loss you need

To minimize taxes, use losses to offset gains dollar-for-dollar. For example, if you have $10,000 in gains, use losses to offset as much as possible.

Step 4: Sell the losing investment

When you sell the underperforming asset, be sure to document the transaction for your tax records.

Step 5: Wait 30+ days before repurchasing

Do not rebuy the same investment within 30 days before or after the sale. This violates the wash sale rule and disqualifies your tax loss. If you want to keep with a certain allocation, buy a similar (but different) investment.

Step 6: Track your loss carryforwards

If you have more losses than gains, carry unused losses forward to future years. You can deduct up to $3,000 against ordinary income each year, and any remaining losses roll forward indefinitely.

Example of tax-loss harvesting:

• You own Tech Fund A (lost $7,000) and Stock B (gained $10,000).
• You sell Tech Fund A and claim the $7,000 loss.
• You buy Tech Fund C (similar sector, different fund) to maintain allocation.
• Net taxable gain: $10,000 - $7,000 = $3,000.
• Tax savings: $3,000 × 24% = $720 (at 24% tax bracket).

Strategic asset location

Place investments in accounts based on tax efficiency.

• Tax-deferred accounts: Bonds, REITs and other income-generating assets
• Taxable accounts: Tax-efficient index funds and individual stocks
• Roth accounts: Your highest-growth-potential investments

Life insurance as a wealth preservation tool

Life insurance serves dual purposes in wealth preservation: protecting your family and creating tax-advantaged investment growth.

Types of life insurance for wealth building

Bottom line: Use term life insurance to protect your family affordably. Use permanent insurance for wealth preservation if you have a high net worth and need long-term coverage.

Maximizing investment potential

To use life insurance effectively for wealth preservation:

• Fund the contract with maximum premiums allowed under IRS rules.
• Minimize the death benefit to maximize investment allocation.
• Use policy loans to access funds tax-free in retirement.
• Hold until death to pass benefits to heirs income-tax-free.

Estate planning trusts and asset protection

Trusts offer powerful legal strategies for protecting wealth from creditors, lawsuits, and excessive taxation. They provide flexibility and control over asset distribution while offering significant tax advantages.

Dynasty trusts

Dynasty trusts are long-term trust structures that can last for hundreds of years and pass wealth to multiple generations. Assets in a dynasty trust can help reduce estate taxes as they pass from one generation to the next. They keep inherited assets outside of each heir's taxable estate, reducing exposure to estate taxes over time and allowing your wealth to grow without constant tax interruptions.

Dynasty trusts work especially well for appreciating assets like business interests or real estate that you expect to grow significantly in value.

Asset protection trusts

Designed specifically to protect wealth from creditors, these trusts are established in jurisdictions with favorable asset protection laws. They create legal barriers between your assets and potential claims.

Estate planning essentials

According to a LegalShield survey, nearly 60% of U.S. adults don't have a will, even though 90% acknowledge they need one.² A comprehensive estate plan ensures your wealth transfers efficiently to heirs while minimizing taxes and legal complications.

Key documents include the following:

• Will and testament
• Financial and healthcare powers of attorney
• Beneficiary designations on all accounts
• Trust documents when appropriate

Portfolio management: Review and rebalancing

Wealth preservation requires ongoing attention and adjustment because your financial situation, goals and market conditions change over time.

Annual review process

Schedule yearly meetings with your wealth advisor:

1. Compare actual progress against your goals.
2. Rebalance portfolios to maintain target allocation.
3. Adjust contributions based on income changes.
4. Update beneficiaries and estate planning documents.

Market volatility

Be careful about making emotional decisions during market downturns. Stick to your long-term strategy. Use volatility as an opportunity to harvest tax losses and rebalance at more favorable prices.

Professional insurance protection strategies

Beyond life insurance, comprehensive wealth protection also covers risks that could derail your financial plan.

Essential coverage types

Umbrella liability insurance

• Protects against large lawsuit judgments.
• Covers amounts beyond your auto and homeowner's insurance limits.
• Relatively inexpensive for the protection provided.

Long-term care insurance

• Protects retirement savings from healthcare costs.
• Covers in-home care, assisted living and nursing homes.
• Premiums increase with age, so consider purchasing earlier.

Disability insurance

• Replaces income if you can't work due to illness or injury.
• Your ability to earn income is likely your most valuable asset.

• Group coverage through employers often provides insufficient benefits.

Alternative investments for high-net-worth investors

High-net-worth individuals often diversify into alternative investments beyond traditional stocks and bonds. These can provide additional return potential and risk diversification.

Alternative investment options

Real estate investment trusts (REITs)

A REIT is run by a company that owns or finances real estate properties and pays out most of its profits as dividends to shareholders. REITs let you invest in real estate without buying or managing actual property.

• Provides real estate exposure without direct property ownership.
• Can offer higher dividend yields than stocks.
• Can hedge against inflation.

Private equity and venture capital

• Potential for higher returns than public markets.
• Require larger minimum investments.
• Less liquid than traditional investments.

Commodities and precious metals

• Can provide inflation protection.
• Adds diversification to traditional portfolios.
• Buyers should consider allocation limits due to volatility.

Business succession planning

If you own a business, having a well-structured succession plan is critical for preserving wealth. Without proper planning, business value can be lost due to taxes, family disputes or forced sales.

Key succession strategies

• Buy-sell agreements with co-owners
• Family limited partnerships for gradual wealth transfer
• Employee stock ownership plans (ESOPs)
• Strategic sale planning to maximize after-tax proceeds

Navigating 2026's economic challenges

Current economic conditions make wealth preservation more critical than ever. With inflation still elevated and recession risks present, your strategy must adapt to changing circumstances.

Inflation protection strategies

• Include some assets in your portfolio that historically outpace inflation.
• Consider treasury inflation-protected securities (TIPS).
• Review and adjust spending assumptions in your financial plan.

Market volatility management

• Stick to your long-term asset allocation strategy.
• Use dollar-cost averaging for regular investments.
• Keep adequate cash reserves to avoid selling investments at poor times.

Taking action: Your next steps

Wealth preservation requires both planning and execution. Start by assessing your current situation against these strategies and identifying the biggest gaps in your approach.

Immediate actions:

1. Calculate your emergency fund target and current savings gap.
2. Review your retirement account contributions against the 2026 limits.
3. Schedule an annual portfolio review with a qualified advisor.
4. Update beneficiary designations on all accounts.

Medium-term priorities

• Implement tax-loss harvesting strategies.
• Review the adequacy of your insurance coverage.
• Consider trust structures if appropriate for your situation.
• Develop or update your estate plan.

Remember that wealth preservation is an ongoing process, not a one-time event. Regular reviews and adjustments ensure your strategy continues working effectively as your life and economic conditions change.

Ready to strengthen your wealth preservation strategy? Contact Associated Bank's wealth management team to discuss how these strategies can work for your specific situation. Our experienced advisors can help you navigate the complexities of protecting your wealth while maximizing your tax advantages and long-term growth potential.

Learn more about Associated Bank's wealth management services.

1. Source: https://www.bankrate.com/banking/savings/emergency-savings-report/
2. Source: https://www.legalshield.com/blog/do-americans-have-the-wills-they-deserve