The plight of a high earner running low on money in retirement is more common than you think.

Sure, we’ve all heard the stories of famous people who declared bankruptcy (or close to it) despite making serious money: Michael Jackson, Willie Nelson, Mike Tyson, Marvin Gaye, Larry King, Cyndi Lauper, Ulysses S Grant, Mark Twain … the list goes on.

What’s less spectacular and much more common is 6- or 7-figure earners forced to cut back spending dramatically in retirement.

It doesn’t have to be that way.

If you’re a high earner – or know someone who is – here’s a list of eight steps to lock in a healthy retirement.

1. Save, save, save (and did we mention save?). A high income is great. Spending on cool trips and toys is fun, and fine, within limits. Supporting your kids is a worthy goal. But if you want to afford retirement, saving enough is all that matters.
2. Make a financial plan at least 10 years before retirement so you know what you need to save every year. Then do it.
3. Don’t spend a lot of time budgeting. If you have a big income, all you need to do is follow your monthly savings plan. How you spend what’s available to spend doesn’t matter.
4. Assume Social Security won’t be there for you. I hope I’m wrong. But if you’re a high earner in your 40s or 50s, be conservative and assume your benefit will be cut back. Sooner or later, the US will have to address its debt. The bigger our debt grows, the more cutting Social Security and Medicare becomes the obvious solution.
5. Invest aggressively, and wisely. That means the majority (probably 75%+) of your investments should be in stock – preferably low-fee, diversified ETFs or mutual funds. Warning: investing aggressively does not mean buying crazy stuff (see point 7 below).
6. Never buy an annuity. They are almost always a bad deal. You will typically have consigned yourself to a 3% return, which may not even keep up with inflation. The only people who should buy an annuity are people with modest net worth who face a risk they will run out of money if they live for much longer than normal.
7. Stop being nice to friends with “can’t lose” business ideas. If people think you make good money, you will receive lots of offers to invest in “special” deals. At most, allocate 1-2% of your investment portfolio to friends’ investment ideas. Even better, tell them your humorless financial advisor vetoed any non-traditional investing.
8. Carefully manage the fees you pay your advisor, if you have one. Assuming your portfolio is $5 mm or more, the all-in fees should be well under 1%. At Old Peak, we’re proud our fee structure is below the industry average.

If you’re a high earner, don’t sweat the small stuff, like your daily Starbucks macchiato … or even the big stuff, at least in moderation. But don’t let your pay stub blind you. Make a financial plan and then hit the annual saving target which will lock in a comfortable retirement.