Are retirees’ nonworking assets dragging them down?

in a state synonymous with retirement, Michael Landsberg, partner and chief investment officer at Punta Gorda, Florida-based Landsberg Bennett Private Wealth Management, which manages roughly $1 billion in assets for high-net-worth retirees and is an affiliate of Hightower Advisors, believes retirees should change the way they think about their financial assets.  

Upon retiring, one may have a primary residence, a vacation home or two, multiple cars, and maybe even a boat. While all of these assets can amount to a sizable net worth on paper, they may actually be costing a retiree more money and stress, and working against their financial well-being while in retirement.   

“We discuss the concept of working assets versus nonworking assets with all of our clients,” Landsberg said.   

Nonworking assets cost money. The vacation home, the second or third car, and the boat all require money, time, and effort to maintain. Working assets, such as rental properties or stocks, generally produce income and don’t involve tremendous financial expenditures to maintain.   

Landsberg said that it’s important for retirees to reassess these assets and consider downsizing their home or selling the unused vacation home, in an effort to streamline their financial life and shed assets that are costing money to maintain and keep every month.   

Many nonworking assets look attractive on paper, but they’re actually financially problematic.   

“It’s not just about money — many retirees may not want to spend their retirement grappling with the stresses and upkeep of maintaining multiple homes,” Landsberg said.  

The decision to downsize also makes it more likely that retirees can rely less on debt to fund their lifestyle.   

“A lot of time we create financial plans based off the idea that clients live in a house from age 65 to 85 and then most likely downsize after that,” he said. “Ideally there’s some equity in the home, although we don’t recommend clients borrowing against the equity in their home to finance their lifestyle expenditures. The clients that we work with typically don’t have mortgages.”  

Debt is a costly and often overlooked expense for retirees.  

 “I wouldn’t want a client to take out a home equity loan and have the interest rate go from 2% to 8% because that just works against their cash flow every month, so getting rid of cash-intensive assets and downsizing may be the best option,” he added.  

Landsberg’s career in finance spans more than 30 years. He has been interested in numbers and finance ever since fourth grade.   

Landsberg Bennett Private Wealth Management was founded in 2012 by Michael Landsberg and Lew Bennett, both of whom previously spent more than a decade at Merrill Lynch.