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Q: How Is Net Worth Calculated?

There are three steps for calculating net worth: Add up assets, add up liabilities, and then subtract liabilities from assets

Mar

2025

What Are High-Net Worth Individuals?

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

Table of Contents

What Defines a High Net Worth Individual?
Benefits Afforded to HNWIs
HNWI Examples & Statistics
How Is Net Worth Calculated?
What Is an Ultra High Net Worth Individual?
How to Get a Higher Net Worth
FAQ

A high net worth individual (HNWI) is generally considered to be someone who has $1 million or more in investable assets. That includes liquid assets such as cash or cash equivalents.

Someone who has a high net worth may rely on specialized financial services for money management. For example, they may work with a wealth manager or open accounts at a private bank. In terms of financial planning, the needs of high net worth individuals may include estate planning, investment guidance, and tax management.

Achieving a high net worth is something that can be done through strategic investing and careful portfolio building. It’s important to keep in mind that high net worth individuals may have access to certain investments that the everyday investor would not. Minimizing liabilities is another part of the wealth-building puzzle, as net worth takes debt into account alongside assets.

Key Points

• A high net worth individual (HNWI) is someone with $1 million or more in investable assets, including cash or cash equivalents.

• HNWIs may rely on specialized financial services like wealth managers or private banks for money management, estate planning, investment guidance, and tax management.

• Different metrics, such as income, investable assets, and net worth (assets minus liabilities), can be used to define high net worth individuals.

• The SEC requires registered advisors to disclose information about high net worth individuals on Form ADV, and accredited investors are also considered high net worth individuals.

• HNWIs may enjoy benefits like reduced fees, discounts on financial services, access to exclusive investments, and special perks and events.

What Defines a High Net Worth Individual?

When it comes to the high net worth definition, there are different metrics that can be used to calculate net worth and determine whether someone falls under the high net worth umbrella. Those can include a person’s:

• Income

• Investable assets

• Total net worth when liabilities are deducted from assets

The Securities and Exchange Commission (SEC) requires registered advisors to provide information about high net worth individuals on Form ADV. Specifically, the form asks advisors to list how many clients they serve who have $750,000 in investable assets or a $1.5 million net worth.

The SEC can also refer to high net worth individuals when discussing accredited investors. An accredited investor is defined as having:

• Earned income of $200,000 or more (or $300,000 for couples) in each of the two prior years, with a reasonable expectation of the same income in future years

• Net worth of over $1 million either alone or with a spouse, excluding the value of a primary residence

What is considered a high net worth individual to those who work with them? Private banks or wealth managers who serve high net worth individuals might choose to define them differently. For example, someone who wants to open an account with a private bank might need to have $5 million or $10 million in investable assets to qualify. Someone who has that much in assets may be relabeled as “very high net worth” instead. And at higher levels of assets, they enter the realm of ultra high net worth.

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Benefits Afforded to HNWIs

High net worth individuals may get a number of special benefits. For instance, they might qualify for reduced fees and discounts on financial services like investments and banking. They may also be granted access to special perks and events.

HNWI can also invest in things other investors or the general public can’t, such as hedge funds, venture capital funds, and private equity funds.

HNWI Examples & Statistics

The super rich, or HNWI, are tracked by Forbes on the Real-Time Billionaires List, which is updated daily. As of August 31, 2023, these were the HNWI at the top if the list:

• Elon Musk with a net worth of $248.8 billion

• Bernard Arnault and family with a net worth of $208 billion

• Jeff Bezos with a net worth of $160.9 billion

• Larry Ellison with a net worth of $152.3 billion

• Warren Buffet with a net worth of $121.1 billion

How Is Net Worth Calculated?

Wondering how to find net worth? It’s a relatively simple calculation. There are three steps for figuring out net worth:

1. Add up assets. These can include:

◦ Bank account balances, including checking, savings, and certificates of deposit

◦ Retirement accounts

◦ Taxable investment accounts

◦ Property, such as real estate or vehicles

◦ Collectibles or antiques

◦ Businesses someone owns

2. Add up liabilities. Liabilities are debts owed. For example, a home’s value can be considered an asset for net worth calculations. But if there’s a mortgage owing on it, that amount has to be entered into the liabilities column.

3. Subtract liabilities from assets. The remaining amount is an individual’s net worth.

Net worth can be a positive or negative number, depending on how much someone has in assets versus what they owe in liabilities.

Net Worth vs Liquid Net Worth

In simple terms, net worth is the difference between assets and liabilities. Liquid net worth, on the other hand, is the difference between liquid assets and liabilities. A liquid asset is one that can easily be sold or used to invest. So cash in a savings account is an example of a liquid asset while investments in a real estate investment trust (REIT) would be illiquid since they can’t be sold at short notice.

What Is an Ultra High Net Worth Individual?

Someone who fits the definition of an ultra high net worth individual (UHNWI) generally has personal financial holdings or assets of $30 million or more. People who are considered to be ultra high net worth individuals are among the top 1% wealthiest in the world.

So what is the net worth of the top 1%?

According to a report from Knight Frank, the typical net worth of the 1% falls far below the $30 million in assets required for ultra high net worth status. For example, in the U.S. someone would need $4 million in wealth to join the ranks of the top 1%. They’d need $7.9 million to belong to the top 1% in Monaco.

But what about the top 0.1%? Again, the level of wealth needed to qualify is still below the $30 million cutoff required for an UHNWI. In the U.S., you’d need $25.1 million to be considered part of the 0.1%. This is the highest amount of assets needed to qualify among the countries included in Knight Frank’s research.

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How to Get a Higher Net Worth

Reaching high net worth status can be a lofty goal but it’s one many HENRYs — high earner not rich yet — work toward. The typical HENRY makes most or all of their income from working. While they may earn an above-average income, they may not have sufficient disposable income to start building wealth to increase their net worth.

There are, however, some ways to change that. For example, someone who earns a higher income but doesn’t have the higher net worth to reflect it may consider things like:

• Paying off student loans or other debts

• Relocating to a less expensive area to reduce their cost of living

• Rethinking their tax strategy so they’re able to keep more of their income

• Finding ways to increase income

Coming up with a solid investment strategy is also important for boosting net worth. That includes diversifying to manage risk while investing in assets that are designed to produce income. For example, that might include such things as:

• Purchasing shares of dividend stocks

• Enrolling in a dividend reinvestment plan (DRIP)

• Buying dividend exchange-traded funds (ETFs)

• Investing in REITs or real estate mutual funds

Creating multiple streams of income with investments or starting a side hustle while also reducing liabilities can help with making progress toward a higher net worth. At the same time, it’s also important to take advantage of wealth-building assets you may already have on hand.

For example, if you have access to a 401(k) or similar plan at work, then making contributions can be an easy way to increase net worth. If your employer offers a company matching contribution you could use that free money to help build wealth.

The Takeaway

High net worth individuals are typically described as people who have $1 million or more in investable assets. Those with more than $5 to 10 million in investable assets may be labeled as “very high net worth”, and those with more than $30 million are generally considered ultra high net worth individuals.

Individuals with a higher net worth often consider time to be an asset in itself. The thinking goes, the sooner you begin investing, the better.

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FAQ

What are different types of high-net-worth individuals?

There are several types of high net worth individuals. Those who are high net worth have more than $1 million. Individuals with about $5 million are considered very high net worth. If a person has more than $30 million dollars they are considered ultra high net worth.

Where are most of the HNWIs located?

North America has the most high net worth individuals. There are 7.9 million HNWI in North America. The Asia-Pacific region has 7.2 million high net worth individuals, and there are 5.7 million HNWI in Europe.

Do high-net-worth individuals include 401(k)?

Yes. All of your different retirement accounts, including your 401(k), are included as assets when calculating high net worth.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/Cecilie_Arcurs

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Mar

2025

12 High Income Skills to Learn

By Rebecca Lake | Building Your Career, Life & Career, money | Comments Off

Want to boost your earning power? High-income skills can translate to a bigger paycheck since employers or clients may be willing to pay a premium to workers who possess them. Generally, high-paying skills are specialized skills that are considered to be in demand. Here, you’ll learn about 12 high-paying job skills, from generative AI (artificial intelligence) to UX (user experience) know-how, that may be worth picking up. They can hold the potential to help earn more money and achieve your financial goals.

Key Points

• High-income skills like generative AI, data analysis, and UX design are in demand and can significantly boost earning potential.

• Learning new skills is essential for adaptability and job security in a rapidly changing job market.

• Specialized training, whether received through degree programs, online courses, or trade schools, is often required to acquire high-paying skills.

• Soft skills, including communication and problem-solving, are valuable and can lead to high-income positions.

• Freelancing and side hustles provide opportunities to apply high-income skills and increase earnings.

Why Learning New Skills Matters

Adaptability and the ability to learn can be invaluable, whether trying to land your first job or gig or one farther along in your career. Learning new skills can help you to better keep up with a changing job landscape. Here, some points to consider:

• Acquiring high-income skills could make it easier to stand out among the crowd when competing for positions or freelance gigs. You may have a more diverse range of job options to choose from. Your skills may also translate to a larger paycheck if they’re sought-after by employers or clients.

• Some of the highest paying jobs are in the computer and information technology fields. If you’re able to learn the skills needed to get those jobs, either as a full-time employee or a freelancer, that could substantially boost your lifetime earnings.

• Relevancy is also a factor. If you’re up to date on the latest high-paying skills that could make you much more valuable in an employer or client’s eyes. Should the company or client need to cut back on staffing, your job could be secure if you hold a skill set that your colleagues can’t match.

Recommended: 25 High-Paying Trade Jobs

15 High-Income Skills to Learn

The best high-income skills to learn are ones that can help you to increase your earnings while also doing work that you enjoy. Certain lucrative job skills may require a college degree to learn, while others can be acquired through online courses and certification programs. There are also skills you might be able to pick up without going to school.

Here are some of the best high-paying job skills to learn now, including remote job skills and tech skills, whether you are looking for a full-time or freelance job.

1. Artificial Intelligence (AI)

As you have likely heard, artificial intelligence, especially generative AI (aka GenAI), is a new technology that is transforming many fields. AI tools can enhance productivity and can be used in a variety of ways, from writing content for websites to providing customer service. One of the keys needs in this realm is to engineer prompts; that is, to fine-tune AI requests to get optimal feedback.

How Much Can Someone With AI Skills Make?

If you build AI skills, you might find a role as an AI developer (average base pay at the end of 2024 is $109,000) or an AI engineer (with a base pay of almost $133,000 on average). That could help you keep a competitive income flowing into your checking account.

What Education Do You Need?

Working with AI likely requires specialized training. This might be offered by a continuing education, professional skills, or trade school program, whether from a renowned university or a smaller organization. You may also find online courses from businesses like Coursera, which specialize in online learning.

2. Data Analysis

Another key skill to consider if you want to earn more is data analysis. Data plays a critical role in decision-making across an array of industries, and being able to gather, parse, and share data is a rising skill. There are many tools that can be part of succeeding at data analysis. Some may focus on working with programs such as Python, SQL, Tableau, or others.

How Much Can Someone With Data Analysis Skills Make?

With skills under your belt, you might expect to earn an average of about $85,000 base pay as a data analyst (who interprets data) to an average of almost $117,000 as a data scientist (who typically uses data to create predictive models). That could help you stash more money in your savings account or pay down debt.

What Education Do You Need?

You will likely need to build your skills. There are online courses, often ranging from four to 16 weeks, to start your education. These could be hosted by small, focused companies, local colleges, or high-profile universities, such as Harvard or Cornell’s online continuing education divisions. A data scientist will typically require a graduate degree.

3. SEO Skills

SEO, or search engine optimization, involves knowing how to structure website content in order to push it to the top of search engine rankings. This skill is in high demand, and businesses are willing to pay well for it. The reason: Higher search rankings can translate to more clicks and more purchases.

How Much Can Someone With SEO Skills Make?

It’s possible to find full-time SEO jobs, but you could also offer freelance SEO services if you’d like to be your own boss. The average annual pay for an SEO strategist is currently about $95,000.

What Education Do You Need?

Studying guides and information published by SEO experts can be a good starting point for learning more about this skill, and there are online courses as well, many of which provide certificates.

4. Cybersecurity

As so many aspects of our lives shift to digital realms, cybersecurity has been rising as a key need, for private individuals, enterprises, and the government. There has unfortunately been a significant uptick in online security breaches. These hacks can lead to sensitive data falling into the wrong hands as well as financial loss, bank fraud, and identity theft.

How Much Can Someone With Cybersecurity Skills Make?

Learning how to protect platforms and systems from these issues can be a valuable skill as well as one that can pay a competitive salary. According to the Bureau of Labor Statistics, the median pay for an information security analyst is approximately $120,000 per year.

What Education Do You Need?

Cybersecurity can involve training at such options as a trade school, continuing-ed program, or online academy to build skills. Certifications can be a valuable achievement as you gain deeper expertise. While you don’t necessarily need a college or postgrad degree, it can be helpful in opening doors to some paths in cybersecurity.

5. Copywriting

Copywriting involves creating written content that’s intended to inform, entertain, and/or persuade. Similar to email marketing, copywriters help businesses and brands to sell their products and services.

Some of the ways you could leverage high-income skills as a copywriter include writing website content, sales pages, marketing emails, sales brochures, or newsletters. Copywriting allows for further specialization if you’re focusing on a single niche. For example, you might write for petcare companies or companies in the beauty or wellness niche. If you cultivate a niche, copywriting can allow you to channel your personal interests (such as travel or fitness) into your work.

How Much Can Someone With Copywriting Skills Make?

The average salary for a copywriter is about $62,000, but the top 10% earn more than $121,000. Additionally, copywriting can be a pursuit that lends itself to gig work and freelancing, so it can be a way to bring in additional income.

What Education Do You Need?

Some people have an innate “way with words” and don’t need any specialized education to hold a job as a copywriter. Others may want to build their copywriting skills, which may be offered by a professional or continuing education school.

6. Software Development

Software developers create operating programs for computers and other devices. Keeping user needs in mind, they typically design, build, test, and then maintain software. They use a variety of skills and tools to do so, and may also create applications for mobile devices and computers.

How Much Can Someone With Software Development Skills Make?

According to the Bureau of Labor Statistics, software developers earn a median pay of about $120,000 per year, so this could be a good high-income skill to learn if you’re hoping to earn a six-figure salary.

What Education Do You Need?

Becoming a software developer starts with learning the basics of coding, which is something you might be able to do through a trade school or online coding bootcamp. Some of the skills you may need include knowledge of program languages Python, Java, JavaScript, and C++, among others.

7. Web Development

Web development is similar to software development, but the focus is on creating websites and web applications. Web developers need to be knowledgeable about programming languages like HTML, CSS, and JavaScript. They also have to be familiar with different website-building platforms, such as WordPress. A web developer may work with a web designer to create new sites for clients or redesign existing ones.

How Much Can Someone With Web Development Skills Make?

According to Ziprecruiter, typical pay for a web developer is around $93,000 in the U.S.

What Education Do You Need?

To learn web development, you’ll likely need to take an in-person or online course to start learning programming languages. There are likely many options, from those offered by coding academies to community colleges to universities professional studies divisions.

8. Project Management

Project managers oversee the completion of large-scale projects from start to finish, often in information technology (IT) or computer-related fields. The project manager’s primary duty is to help the company or client they’re working with achieve their end goals for the project.

How Much Can Someone With Project Management Skills Make?

According to the Bureau of Labor Statistics, the average salary of a project management specialist is just under $100,00 per year.

What Education Do You Need?

Project managers may require certain hard skills, such as coding knowledge, which can be learned via specialized training at, say, a trade school or via an online course. However, they can also utilize soft skills (more on those below), such as effective communication and the ability to direct a team.

9. UX Design

UX refers to user experience, or how a person interacts with a product or service. It’s an important element of websites and apps, as well as physical products and services. When consumers visit a website or log in to their favorite apps, they want them to be fast and easy to navigate. Likewise, when someone purchases something or signs up for an online service, they want it to function the way they’re expecting it to. UX design experts help to iron out the kinds to deliver the best user experience possible.

How Much Can Someone With UX Design Skills Make?

A UX designer can expect to make around $123,000 per year, according to Glassdoor.

What Education Do You Need?

User experience jobs can require specialized training, depending on whether UX design is delivered for a digital property or something more rooted in the offline world. You may need skills in the realm of information architecture, prototyping, and usability testing. These are typically learned via online courses, bootcamps, and certification programs, though there are also masters degree programs available.

10. Affiliate Marketing

Affiliate marketing means marketing another entity’s products or services and earning commissions each time someone makes a purchase. For example, a blogger who includes affiliate links to Amazon products in their web content might earn money if a reader clicks their links and buys something.

How Much Can Someone With Affiliate Marketing Skills Make?

If pursued as a full-time job, affiliate marketing typically earns a person about $82,000 per year. But affiliate marketing could be an ideal high-income skill to learn if you’re interested in generating passive income online or picking up some freelance work.

What Education Do You Need?

Affiliate marketing can typically be learned (at least the beginning stages) via online guides and courses.

11. Mobile App Development

Mobile apps are part of many people’s daily lives. They can offer convenience if you’re using them to log in to your online bank account or manage your investments. Other apps can provide entertainment if you’re using them to watch videos, play games, or listen to music.

Companies can hire mobile app developers to create apps and test them before releasing them to the market. It’s possible that you could even try moonlighting work, and create your own mobile app and sell it, in some cases building a six-figure business in the process. Or it could be your main gig.

How Much Can Someone With Mobile App Development Skills Make?

The current average salary for a mobile app developer is around $110,000, according to Ziprecruiter.

What Education Do You Need?

Mobile app development can be learned in a variety of ways, but one popular avenue is to take online courses at such platforms as Coursera, Udemy, and the like.

Recommended: 15 Low-Cost Side Hustles

12. Soft Skills

Soft skills are a diverse professional toolkit. They’re based on a different sort of knowledge that doesn’t involve learning how to code or develop software. Examples of high-paying soft skills include good communication skills, problem-solving skills, creative thinking, and time management skills. Employers and clients can value those skills just as much as some of the other high-income skills on this list. These skills can be used in high level administrative, coordinator, and management positions.

How Much Can Someone With Soft Skills Make?

While there’s no single skill to cultivate or average salary to cite, these capabilities can help propel a person to a high-income position.

What Education Do You Need?

Building soft skills doesn’t typically require formal coursework. You may find books and podcasts by respected experts that can help you cultivate some of these skills.

Recommended: Life Skills That Can Help You Save Money

What Will Be the Highest-Paying Skills in 2025?

There isn’t one single skill that is destined to pull in major money in 2025. For instance, one person might make loads of money via affiliate marketing due to excellent instincts or having a product go viral, while another person might earn a minimal amount at the same pursuit.

However, a review of an array of sources finds that most say that AI, coding, and data analysis will be very valuable skills to have in the year ahead.

Tips for Developing High-Paying Skills

There are several options for learning the high-paying job skills you might need to succeed. Which one you choose can depend on the skills you want to learn and how much you know about them already. Some of the possibilities for developing high-income skills include:

Completing a two- or four-year degree program at a college or university

• Attending a trade school

• Utilizing online resources, like YouTube or blogs

• Taking paid online courses and earning certifications that are independent of a degree program

• Applying for internships or freelance jobs that could allow you to learn the skills you need

• Asking someone who already possesses your desired skill set to act as your mentor

• Working with a professional coach to help you develop your skills

Some of these options cost money; others don’t. If you’re on a tight budget, then you might want to start with free resources like well-rated YouTube tutorials. After that, you could consider what kind of investment you might want to make in a paid course or degree program.

Trade school can be more affordable than a four-year college or university for learning certain skills. Web development and coding are just two of the high-paying skills you could brush up on. Community colleges and continuing ed programs at universities may also offer affordable classes that will allow you to develop your talents.

If you’re considering applying high-income skills to start a freelance business, it’s also a good idea to give some thought to the financial side. Financial planning for freelancers includes things like budgeting for irregular income, learning how to set your rates, filing taxes, and saving for retirement.

The Takeaway

If your goal is to earn more money, learning some new high-income skills can definitely be worthwhile. From generative AI to UX design to copywriting, there are many avenues to pursue as you build expertise that can help you earn more money.

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FAQ

What high-income skills can you learn in college?

Depending on what classes a college offers, a student might learn about AI, data analysis, coding, web development, UX, and other high-income skills. Also, many colleges offer online courses or continuing education programs in these topics.

What high-paying skills can you learn for free?

Many of the skills that are high-paying can be learned for free, but it can be wise to make sure that free sources you may use (such as downloadable guides, YouTube videos, and the like) are from respected and reliable sources and have good reviews.

What is the easiest high-income skill to learn?

Determining the easiest high-income skill to learn is typically a matter of “it depends.” So much varies from person to person. One person might be a “natural-born” writer and thrive as a copywriter; another might find that they really spark to data analysis and can whip through a course on the topic.

About the author

Rebecca Lake

Photo credit: iStock/nensuria

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Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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SOBNK-Q424-068

Mar

2025

Tips for Helping Your Parents Retirement

By Rebecca Lake | invest, Investing, Preparing for Retirement | Comments Off

Saving for retirement can have its challenges, and there’s one you might not be expecting. You may find yourself helping to plan your parents’ retirement if they’ve fallen short of their savings goals.

Learning that your parents have no, or very little, retirement savings may be disheartening, especially if you’re expected to help fill the gaps in their financial plan. Figuring out how to retire your parents while still keeping your own financial goals in sight can be tricky, but it’s not impossible.

Key Points

• Encourage your parents to discuss retirement openly and build a support system to address financial concerns.

• Your family or a financial advisor can help analyze parents’ financial situation, including savings, debts, and monthly expenses, to plan effectively.

• Help parents find ways to save for retirement by reducing expenses and increasing income.

• If your parents have earned income, ask them to consider opening a retirement investment account, like an IRA, to boost savings.

• Utilize available resources and federal programs to support parents’ retirement planning and saving.

What to Do If Your Parents Didn’t Save for Retirement

When your parents can’t afford to retire your first instinct might be to get angry or place blame. However, it’s important to remember that you’re not alone and there are others like you in the same situation.

Consider this: More than half of retirees and pre-retirees aged 50 to 74 report feeling financially fragile. And the median retirement savings among them, per recent data, was just $128,000. Among pre-retirees, too, almost one-third said they had no plans for when to retire.

Statistically, women are less likely to have retirement savings than men. About 50% of women aged 55 to 66 have nothing saved for retirement, compared to 47% of men according to Census Bureau data. Being married more than once decreases women’s likelihood of having something saved for retirement.

The numbers aren’t encouraging, but it’s not too late to help your parents get back on track to retire. Assuming one or both of your parents are still working there are some things you can do to help them make the most of their current income in order to save for retirement.

How to Help Your Parents Retire

Retiring your parents may not be an easy task but it’s important to stay focused on the bigger goal. Also, remember that while it’s fine to want to help your parents retire, sidelining your own finances to do that could put your own retirement at risk.

1. Talk to Them About the Situation

Talking about money with your parents may be uncomfortable if they’ve never been forthcoming about their finances. However, it’s important to have an honest discussion about where they are with regard to retirement planning.

Doing so can help you both set realistic expectations. Some of the possible topics to discuss include:

• Living arrangements: Will they continue to live in their current home? If so, is that home paid for? And if they don’t plan to stay in the home, will they expect to live with you or move somewhere else?

• Financial support: If they lack retirement savings of any kind, will they expect you to help out financially? If the answer is yes, what does that translate to in hard numbers?

• Long-term planning: Should one or both of your parents require nursing care, what will that look like? Will you be their caregiver or will they need to move to an assisted living or long-term care facility? How much will that cost and where will the money come from to pay for it?

Those are just some of the issues that might come as you dig into the retirement planning conversation. Keep in mind that it shouldn’t be a one-time chat, either. If you’re planning to help retire your parents, then you’ll all need to be comfortable with discussing it on an ongoing basis.

2. Get Support

Trying to help your parents retire can be overwhelming and it’s a good idea to look for outside support if possible. If you have siblings, for example, you can ask them to join in the discussions about money and retirement planning. You might enlist the help of your parents’ siblings if you’re an only child.

It may also be beneficial to get an expert’s opinion. If your parents are receptive, you might want to consult with an advisor who specializes in financial planning or starting a retirement plan for families, whether that entails opening an IRA online or managing debt. They may be able to offer outside perspectives on the biggest issues that need to be addressed right away to get their retirement plan in shape.

3. Break Down the Numbers

Figuring out how to help your parents retire means taking a close look at their finances. Depending on your family situation, there might be some pushback here but it’s important for you and your parents to sit down and do the math.

Specifically, it’s helpful to understand:

• How much they have saved for retirement, if anything

• What retirement benefits they have through their employer (i.e., a 401(k), pension, etc.)

• How much debt they’re carrying and what types of debt they have

• What their spending looks like in a typical month and how that might change once they retire

• What type of assets they might have, such as a home, investments, or a life insurance policy

Having the numbers in front of you can help figure out what’s realistic, with regard to how much income they’ll need to fund their lifestyle in retirement and how much financial support you might need to provide.

4. Help Them Find Money to Save

If your parents have money coming in from working, then you’re already one step ahead of the game in helping them prepare for retirement. The challenge now is to help them find the money they need to set aside something for the future.

There are several ways to do that:

• Reduce expenses

• Increase income

• Look for “free” money

If you’ve already gone over the details of their monthly spending, the next step is walking through their budget with them to find expenses they can cut out. The more drastically your parents can cut their expenses, the more money they may be able to free up for retirement savings.

When there’s debt in the picture, whether it’s credit cards, car loans, or a mortgage, consider how they could get rid of those expenses. Taking a personal loan to consolidate credit cards, for example, could help them save on interest while paying off what they owe faster. The same goes for refinancing their mortgage.

Increasing income may be trickier, but you could suggest things like getting a part-time job or second job, or starting a small side hustle. Even something like selling things around the house they don’t need can bring in extra income they could use to save for retirement.

Finally, consider what free money they might be passing up. If they have a 401(k) at work, for example, but aren’t contributing enough to get the full company match then a simple adjustment to their annual contribution rate could fix that. That’s a smart way to encourage them to start investing or at least reviewing stock market basics in retirement with the income they already have.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

¹Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

5. Open a Retirement Investment Account

If your parents don’t have a 401(k) or similar plan at work, it’s never too late to think about starting a retirement plan. And even if they do have a workplace plan, they could still benefit from opening a secondary account for retirement savings.

Among the different types of retirement plans, an Individual Retirement Account (IRA) is the most accessible for savers who have earned income. You could encourage your parents to open a traditional or Roth IRA, depending on their current tax situation and where they expect to be tax-wise once they retire.

With traditional IRAs, contributions are typically tax-deductible and anyone can contribute. A Roth IRA, on the other hand, allows for tax-free qualified withdrawals in retirement. Eligibility to contribute is based on income and filing status. Understanding the differences can help with choosing a retirement plan for your parents, or yourself if you have yet to start saving.

6. Take Advantage of Available Resources

There are numerous federal programs that are designed to help retirees manage their financial lives. Researching what’s available can help you figure out what benefits your parents might qualify for once they retire.

For example, it’s important to consider when parents should take Social Security benefits if they don’t have retirement savings. The earliest age for claiming benefits is 62, but taking benefits early can reduce the amount retirees receive. Delaying benefits to age 70 can increase their monthly payments, but that may not be realistic.

Other options for getting financial help include:

• Medicare, which provides health insurance coverage for seniors 65 and older

• Medicaid, which provides healthcare services for low-income families and individuals

• HUD public housing (for seniors with disabilities or limited income)

• Assistance programs that help with utility bills, heating bills, or phone bills

• Food assistance programs, including Supplemental Nutrition Assistance Program (SNAP) Benefits, and Meals on Wheels

• Assistance programs for military veterans if either of your parents served in the armed forces

• Property tax or homestead exemptions for seniors

• Programs that help with home repairs for eligible seniors

Your parents may not need all of these programs, but it’s still a good idea to know what’s out there. If you’re not sure how to find resources for retirees, you can contact your local departments of health, social services, or adult services to ask for guidance. You can also try your local council on aging, if one exists in your area.

7. Address Long-Term Financial Planning

One of the most staggering costs in retirement for many seniors is healthcare. At the low end, the cost may average almost $25,000 per year for adult assisted living or community care. At the high end, you might pay almost $117,000 on average annually for a private room in a nursing phone.

Purchasing long-term care insurance can help to pick up the tab but policies can be expensive. Medicaid could pay for coverage but your parents would need to meet the income and resource guidelines set by their state to qualify for help.

A hybrid life insurance policy could kill two birds with one stone, so to speak. These policies can pay out benefits toward long-term care during your parents’ lifetime should they need them. They can also pay out a death benefit when they pass away, which could help you to cover things like final expenses or any remaining debts they leave behind.

Again, it may be in everyone’s best interest to sit down and talk these things through with a financial advisor, which may help them think about starting a retirement plan.

Investing for Retirement With SoFi

Discussing their financial plan and sharing tips for investing can help your parents to feel more comfortable about the idea of retirement. At the same time, it’s important to consider where you are on your financial journey. It’s generally a good idea to start saving for retirement as early as possible, but if your parents did not, there are still options.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Help grow your nest egg with a SoFi IRA.

FAQ

Can I open a retirement account for my parents?

No, but you can help them open a retirement account of their own. For example, you could walk them through opening a traditional or Roth IRA at a brokerage. You can also help them to review their retirement account options at work to make sure they’re getting the most benefit possible.

What do you do when your parents haven’t saved for retirement?

When parents have no retirement savings, it’s important to take a deep breath and not panic. It’s possible to help your parents get on track with retirement savings if they’re committed to setting realistic expectations and taking action to set aside as much money as possible in the remaining years before they retire. You may also encourage them to talk to a financial advisor about how to get their finances in shape.

How much does the average family need to retire?

The amount of money one family needs to retire may be very different from another’s, depending on the number of family members and their desired retirement lifestyle. Saving at least $1 million for retirement is a commonly-accepted target, though it may be possible for one person to retire with just $500,000 while someone else might need $2 million to live comfortably.

About the author

Rebecca Lake

Photo credit: iStock/Fly View Productions

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN0322006

Mar

2025

What Is an IPO Roadshow?

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

Before a company can sell its shares on an exchange, it first needs to go through the Initial Public Offering (IPO) process. One of the most critical steps in this process is the IPO roadshow, in which the company pitches itself to potential investors.

A roadshow presentation can take place in-person, with meetings in cities across the country, or the company can offer an online event instead. Either way, the goal is the same: to generate interest in the company that will encourage investors to buy in.

Key Points

• An IPO roadshow is a series of meetings or presentations in which key members of a private company pitch the initial public offering to prospective investors.

• Digital roadshows have become increasingly popular and offer an advantage of increased efficiency compared to traditional roadshows.

• The purpose of an IPO roadshow is to generate interest in a company among prospective investors in order to raise capital.

• Virtual IPO roadshow presentations have the potential to reach a broader audience, rather than being limited to a handful of cities.

• Buying IPO stock can help diversify an investment portfolio, but is typically high risk and requires due diligence.

What Is a Roadshow?

In general, a roadshow is a series of meetings or presentations in which key members of a private company, usually executives, pitch the initial public offering, or IPO, to prospective investors. Effectively, the company is taking its branding message on the road to meet with investors in different cities, hence the name.

The IPO roadshow presentation is an important part of the IPO process in which a company sells new shares to the public for the first time. Whether a company’s IPO succeeds or not can hinge on interest generated among investors before the stock makes its debut on an exchange.

There are also some cases where company executives will embark on a road show to meet with investors to talk about their company, even if they’re not planning an IPO.

💡 Quick Tip: IPO stocks can get a lot of media hype. But savvy investors know that where there’s buzz there can also be higher-than-warranted valuations. IPO shares might spike or plunge (or both), so investing in IPOs may not be suitable for investors with short time horizons.

How Roadshows Work

Typically, the roadshow is the third step in the IPO process, following the selection of an underwriter to oversee the process and the completion of due diligence. At this point, the Securities and Exchange Commission (SEC) reviews all of the documents submitted in connection with the IPO, while the company and the underwriting team get ready for the roadshow.

The underwriters and executives taking part in the IPO roadshow work together to decide which cities to visit, which investors to target, and which information to include in the roadshow presentation.

A typical IPO roadshow presentation highlights the most important information the company wants investors to know, including:

• The company’s history and its plans regarding the IPO

• Details about the top executives

• The current vision and mission statement

• Financial performance and earnings history

• Future sales projections and anticipated growth

• IPO goals

A roadshow IPO presentation may include digital media, such as videos or a slideshow. Investors have a chance to ask questions during a Q&A session following the presentation.

The roadshow tour for an IPO can last anywhere for two to four weeks, depending on how many stops the company makes along the way.

New Digital Roadshows

Virtual roadshows have become an increasingly popular alternative to the traditional IPO roadshow. The pandemic forced companies to rethink the way they meet with investors, resulting in a growing number of roadshows taking place online only.

Digital roadshows mean companies forgo a chance to meet with prospective investors face-to-face, but they offer an advantage in terms of increased efficiency. Company executives and underwriters save money and time, since they’re not traveling. Virtual IPO roadshow presentations also have the potential to reach a broader audience, rather than being limited to just a handful of cities.

If a company schedules multiple presentations in a single day, using a virtual format, they can complete the roadshow move through the IPO process more quickly. This could make it easier to determine the price of an IPO if there’s less opportunity for pricing to be affected by volatility. Pricing the IPO typically happens at the conclusion of the road show.

💡 Quick Tip: The best stock trading app? That’s a personal preference, of course. Generally speaking, though, a great app is one with an intuitive interface and powerful features to help make trades quickly and easily.

Importance of Roadshows

The IPO roadshow presentation is an opportunity for a company to convince investors that buying stock in their company is a good investment opportunity. The main purpose of an IPO is generally to raise capital and companies can’t do that without interest from investors.

IPO stocks are considered high-risk investments, and while some companies may present an opportunity for growth, there are no guarantees. Like investing in any other type of stock, it’s essential for investors to do their due diligence. While individual investors aren’t included in the IPO roadshow process, they can follow the coverage, to understand new details that might emerge about the company.

Pros and Cons of a Roadshow

If the company goes public and no one buys its shares, then the IPO ends up being a flop, which can affect the company’s success in the near and long term. If the company experiences an IPO pop, in which its price goes much higher than its initial offering price, it could be a sign that underwriters mispriced the stock.

A roadshow is also important for helping determine how to price the company’s stock when the IPO launches. If the roadshow ends up being a smashing success, for example, that can cause the underwriters to adjust their expectations for the stock’s IPO price.

On the other hand, if the roadshow doesn’t seem to be generating much buzz around the company at all, that could cause the price to be adjusted downward.

In a worst-case scenario, the company may decide to pull the plug on the IPO altogether or to go a different route, such as a private IPO placement.

The Takeaway

The IPO roadshow presents an opportunity for a new company to convince investors to invest in their organization. The main purpose of an IPO is to raise capital and companies can’t do that without interest from investors.

While individual investors typically don’t have access to roadshows, eligible investors may still participate in IPO trading. Buying IPO stock can help you to diversify your investment portfolio, and may present growth opportunities — but IPO shares are typically high risk. The key is doing your research to find the right companies to invest in as they go public.

Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it's wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

What is the purpose of a roadshow?

The purpose of an IPO roadshow is to generate interest in a company among prospective investors. The company executives and underwriting can meet with investors in-person or virtually to share details about the IPO, the company’s financials and its goals.

How long after the roadshow is the IPO?

The IPO can take place as little as two weeks after the roadshow is completed. The actual timing depends on a number of factors, including whether the underwriters determine that a price adjustment is needed or if any snags come up involving the filing of key documents.

Are IPO roadshows public?

The IPO roadshow process typically focuses on institutional investors, rather than retail investors. So the roadshow presentations have traditionally been private affairs. But with more companies opting to host virtual roadshows, there’s potential for the general public to be able to view IPO presentations online.

About the author

Rebecca Lake

Photo credit: iStock/FreshSplash

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.

New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOIN0623074

Mar

2025

What Is a Guaranteed Minimum Income Benefit (GMIB)?

By Rebecca Lake | Growing Wealth, invest, Investing, Terminology | Comments Off

A guaranteed minimum income benefit (GMIB) is an optional rider that can be included in an annuity contract to provide a minimum income amount to the annuity holder. An annuity is an insurance product in which you pay a premium to the insurance company, then receive payments back at a later date. There are a number of different types of annuities, with different annuity rates.

A GMIB annuity can ensure that you receive a consistent stream of guaranteed income. If you’re considering buying an annuity for your retirement, it’s helpful to understand what guaranteed minimum income means, and how it works.

Key Points

• A Guaranteed Minimum Income Benefit (GMIB) is an optional rider in an annuity contract ensuring a minimum income.

• GMIBs protect annuity payments from market volatility, offering stable income in retirement.

• These benefits are available in variable or indexed annuities, which tie earnings to market performance.

• The cost of GMIBs can be high, as adding riders increases the overall expense of the annuity.

• Evaluating the financial stability of the annuity provider is crucial, as the company’s health impacts the security of the guaranteed income.

GMIBs, Defined

A guaranteed minimum income benefit (GMIB) is a rider that the annuity holder can purchase, at an additional cost, and add it onto their annuity. The goal of a GMIB is to ensure that the annuitant will continue to receive payments from the contract — that’s the “guaranteed minimum income” part — without those payments being affected by market volatility.

Annuities are one option you might consider when starting a retirement fund. But what are annuities and how do they work? It’s important to answer this question first when discussing guaranteed minimum income benefits.

As noted, an annuity is a type of insurance contract. You purchase the contract, typically with a lump sum, on the condition that the annuity company pays money back to you now or starting at a later date, e.g. in retirement.

Depending on how the annuity is structured, your money may be invested in underlying securities or not. Depending on the terms and the annuity rates involved, you may receive a lump sum or regular monthly payments. The amount of the payment is determined by the amount of your initial deposit or premium, and the terms of the annuity contract.

A GMIB annuity is most often a variable annuity or indexed annuity product (though annuities for retirement can come in many different types).

How GMIBs Work

Let’s look at two different types of annuities for retirement: variable and indexed.

• Variable annuities can offer a range of investment types, often in the form of mutual funds that hold a combination of stocks, bonds, and money market instruments.

• Indexed annuities offer returns that are indexed to an underlying benchmark, such as the S&P 500 index, Nasdaq, or Russell 2000. This is similar to other types of indexed investments.

With either one, the value of the annuity contract is determined by the performance of the underlying investments you choose.

When the market is strong, variable annuities or indexed annuities can deliver higher returns. When market volatility increases, however, that can reduce the value of your annuity. A GMIB annuity builds in some protection against market risk by specifying a guaranteed minimum income payment you’ll receive from the annuity, independent of the annuity’s underlying market-based performance.

Of course, what you can draw from an annuity to begin with will depend on how much you invest in the contract, stated annuity rates, and to some degree your investment performance. But having a GMIB rider on this type of retirement plan can help you to lock in a predetermined amount of future income.

Recommended: Types of Retirement Accounts

Pros & Cons of GMIBs

Guaranteed minimum income benefit annuities can be appealing for investors who want to have a guaranteed income stream in retirement. Whether it makes sense to purchase one can depend on how much you have to invest, how much income you’re hoping to generate, your overall goals and risk tolerance.

Weighing the pros and cons can help you to decide if a GMIB annuity is a good fit for your retirement planning strategy.

Pros of GMIBs

The main benefit of a GMIB annuity is the ability to receive a guaranteed amount of income in retirement. This can make planning for retirement easier as you can estimate how much money you’re guaranteed to receive from the annuity, regardless of what happens in the market between now and the time you choose to retire.

If you’re concerned about your spouse or partner being on track for their own retirement, that income can also carry over to your spouse and help fund their retirement needs, if you should pass away first. You can structure the annuity to make payments to you beginning at a certain date, then continue those payments to your spouse for the remainder of their life. This can provide reassurance that your spouse won’t be left struggling financially after you’re gone.

Cons of GMIBs

A main disadvantage of guaranteed minimum income benefit annuities is the cost. The more riders you add on to an annuity contract, the more this can increase the cost. So that’s something to factor in if you have a limited amount of money to invest in a variable or indexed annuity with a GMIB rider. Annuities may also come with other types of investment fees, so you may want to consult with a professional who can help you decipher the fine print.

It’s also important to consider the quality of the annuity company. An annuity is only as good as the company that issues the contract. If the company were to go out of business, your guaranteed income stream could dry up. For that reason, it’s important to review annuity ratings to get a sense of how financially stable a particular company is.

Examples of GMIB Annuities

Variable or indexed annuities that include a guaranteed minimum income benefit can be structured in different ways. For example, you may be offered the opportunity to purchase a variable annuity for $250,000. The annuity contract includes a GMIB order that guarantees you the greater of:

• The annuity’s actual value

• 6% interest compounded annually

• The highest value reached in the account historically

The annuity has a 10-year accumulation period in which your investments can earn interest and grow in value. This is followed by the draw period, in which you can begin taking money from the annuity.

Now, assume that at the beginning of the draw period the annuity’s actual value is $300,000. But if you were to calculate the annuitized value based on the 6% interest compounded annually, the annuity would be worth closer to $450,000. Since you have this built into the contract, you can opt to receive the higher amount thanks to the guaranteed minimum income benefit.

This example also illustrates why it’s important to be selective when choosing annuity contracts with a guaranteed minimum income benefit. The higher the guaranteed compounding benefit the better, as this can return more interest to you even if the annuity loses value because of shifting market conditions.

It’s also important to consider how long the interest will compound. Again, the more years interest can compound the better, in terms of how that might translate to the size of your guaranteed income payout later.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

The Takeaway

As discussed, guaranteed minimum income benefits (GMIB) are optional riders that can be included in an annuity contract to provide a minimum income amount to the annuity holder. Annuities can help round out your financial strategy if you’re looking for ways to create guaranteed income in retirement.

Annuities may be a part of a larger investment and retirement planning strategy, along with other types of retirement accounts. To get a better sense of how they may fit in, if at all, it may be a good idea to speak with a financial professional.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

What are guaranteed benefits?

When discussing annuities for retirement, guaranteed benefits are amounts that you are guaranteed to receive. Depending on how the annuity contract is structured, you may receive guaranteed benefits as a lump sum payment or annuitized payments.

What is the guaranteed minimum withdrawal benefit?

The guaranteed minimum withdrawal benefit is the amount you’re guaranteed to be able to withdraw from an annuity once the accumulation period ends. This can be the annuity’s actual value, an amount that reflects interest compounded annually or the annuity contract’s highest historical value.

What are the two types of guaranteed living benefits?

There are actually more than two types of guaranteed living benefits. For example, your annuity contract might include a guaranteed minimum income benefit, guaranteed minimum accumulation benefit or guaranteed lifetime withdrawal benefit.

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