5 STEPS TO BUILDING WEALTH IN NEW YORK
Advice Empire State residents can put into action.
Article published: August 01, 2025
Building wealth in New York requires smart planning. Whether you’re just starting out or looking to take your finances to the next level, a disciplined approach can help you grow your money and protect it against risk – including inflation, taxes, real estate values and job market fluctuations. So, if you’re wondering how to accumulate wealth in New York, we’ll show you what moves you can consider making now, and why having a personalized financial plan can make all the difference.
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1. ELIMINATE HIGH-INTEREST DEBT IN NEW YORK
You can’t build wealth if your savings are constantly drained by debt. Credit card debt is the most insidious, as it typically has a high interest rate that can trap you in a vicious cycle.
And while New York residents have an average level of credit card use, the high cost of living, especially in New York City, the Hamptons and surrounding areas, might encourage you to whip out the plastic more often than you should. All in all, credit card holders in New York had an average balance of $7,010 in 2024.
Focus on eliminating your credit card debt before you start investing. Here’s one popular strategy: If you have multiple cards, pay more on the one with the highest rate first; then when that’s paid off, move to the next highest and so on. Always pay at least the minimum on your lower interest cards.
On the other hand, auto, college and mortgage loans typically have much lower interest rates and in the case of mortgages can contribute to building home equity, so you should pay those according to schedule. Unless you already have your other debts covered and you have substantial cash reserves, don’t be tempted to pay off these types of debts early.
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2. BUILD EMERGENCY CASH RESERVES FOR NEW YORK LIVING COSTS
The amount you should keep in cash reserves depends on two factors – your monthly expenses and the stability of your income. So, consider:
- What are your mandatory monthly living expenses? Unfortunately, New York has one of the highest costs of living in the U.S. (with an average rent of $3,300 and a home value of over $500k, according to Zillow), so your expenses are likely to be more than others around the country.
- How stable is your income? For example, are layoffs possible? Are you a business owner with fluctuating income or rental income? The more stable your income, the lower your reserves can be.
- Do you have any large, one-time expenses coming up?
Generally, your reserves should be somewhere between three and 24 months’ worth of spending, depending on how stable your income is. Be thoughtful about where you keep your cash – make sure your choice matches your needs and you’re getting a good yield.
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3. MAXIMIZE NEW YORK RETIREMENT OPPORTUNITIES
After addressing your emergency fund, you can shift your focus to retirement planning. Your employer’s retirement plan is a great place to start. Many employers allow you to contribute to a 401k plan or 403b and offer a match on some of the money you save. If you can’t max out your contributions, try to contribute at least enough to earn your employer match (it’s free money, after all). Then, consider increasing the amount every year until you reach the maximum. Make sure to operate within your comfort zone. There are often options to contribute on a pretax and/or after-tax basis.
If you’re married and one spouse does not have a retirement plan at work, consider investing in a spousal IRA as part of your financial planning. The self-employed have options too, so don’t forgo this valuable savings vehicle. The more money you save, the more money you can accumulate, which can bring you closer to financial freedom.
New York State has one of the largest public pension plans in the U.S., covering more than one million government workers and retirees. If you’re one of them, once you qualify, you can have access to a guaranteed income stream in retirement.
If not, see what other retirement benefits you’re eligible for. In New York, many of the top employers are in the health care field. For example, employees at New York-Presbyterian Columbia can benefit from a fully-paid retirement plan, and those at Stony Brook Children’s Hospital, which is part of the State University of New York education system, can save via a 457b plan.
If you’re retiring in New York, here’s some additional good news: New York doesn’t tax Social Security payments at all. And if you’re lucky enough to have a state or local government pension, those payments are also state tax-exempt. Even if your pension isn’t exempt, you may qualify for a $20,000 annual exclusion in retirement.
4. INVEST IN IRAS FOR TAX EFFICIENCY IN NEW YORK
Along with the high cost of living, New York has relatively high state taxes, with an income tax rate (which also applies to capital gains) that can be over 10%. That makes smart tax strategies even more valuable.
One of the best ways to continue to lower taxes while also bulking up retirement savings is to invest in an IRA every year. Depending on your adjusted gross income, you and/or your spouse may still be eligible to contribute to a deductible IRA even after contributing the maximum to your company retirement plan. Deductible IRAs offer two major benefits: you get a tax deduction for the money you contribute; and any interest, dividends or capital gains that accumulate in the plan are also tax-deferred until withdrawal.
If you’re not eligible to invest in a deductible IRA or you’re in a low tax bracket (12% or less), you should consider a Roth IRA instead. Roth IRAs have higher income phaseouts than a Traditional IRA, so they are often available to more people. In any case, look to avoid non-deductible IRAs, which do not entitle you to a tax deduction and require complex tax documentation.
Your advisor can provide financial guidance to help you determine your eligibility, compare options and decide which IRA may be best for you.
5. OPEN A TAXABLE INVESTMENT ACCOUNT TO INVEST BEYOND RETIREMENT
Once your tax-advantaged retirement plan contributions have been exhausted, build assets in an investment account and contribute to it monthly. Additionally, if your plan allows you to contribute after-tax dollars and it will not affect your current lifestyle, consider adding additional after-tax dollars to your 401k plan and converting those dollars to a Roth when permitted.
Taxable accounts are just that – taxable – but they have no contribution limits and you can use the money whenever and for whatever you want. You can invest your money in stocks and bonds to have the best opportunity to grow. We recommend diversification as a key factor that can help you grow your money while helping to control risk.
When you diversify your portfolio, work with your advisor to choose investments aligned to your goals. You might choose to invest in industries that are most prominent in New York, like health care and education, along with others that make up the broad market, like tech, telecom and energy. You can and should consider investing outside the U.S.!
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WHY LOCAL GUIDANCE MATTERS IN NEW YORK
New York-based financial advisors understand your cost of living, tax rules and special opportunities. Working locally with ²ÝÁñÉçÇø Engines can help ensure your strategy is tailored to your unique financial landscape. Find a New York-based advisor today.
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COMMON WEALTH-BUILDING QUESTIONS FROM NEW YORK RESIDENTS
Q: How can I build wealth in New York with high living costs?
A: Start by budgeting, reducing high-interest debt and investing in retirement accounts that offer tax advantages in New York.
Q: Are retirement accounts taxed differently in New York?
A: New York tax rules for retirement plans like pensions, 401ks and IRAs are generally the same as federal rules. Two differences to note:
- State and local government pension income is not taxed in New York
- Even if your pension doesn’t qualify, you may still be eligible for a $20,000 annual exclusion from pension and annuity income
Q: What are the best investment options for New York residents?
A: Choose an allocation appropriate for your goals and risk tolerance. Consider one composed of both U.S. stocks and international stocks and also have some exposure to bonds to help cushion against stock market declines (If you’re in a high tax bracket, consider tax-advantaged New York municipal bonds).
This may be achieved by investing in ETFs and mutual funds. Generally, you don’t want to have more than 5% in any one stock – including your own employer’s – because more than that could prevent you from achieving adequate diversification. In addition, being overconcentrated in one security can cause unnecessary volatility and risk with your retirement savings.
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GET PERSONALIZED HELP BUILDING WEALTH IN NEW YORK
Now that you know how planning and saving for your future can help you build wealth, it’s time for the next step. ²ÝÁñÉçÇø Engines has advisors across New York who can help you create wealth-building strategies that fit your goals, risk tolerance and timeline. Find a location near you or schedule a free consultation.
This material was prepared for educational purposes only. Although the information has been gathered from sources believed to be reliable, we do not guarantee its accuracy or completeness.
Investing strategies, such as asset allocation, diversification or rebalancing, do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. All investments have inherent risks, including loss of principal. There are no guarantees that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies.
Past performance does not guarantee future results.
Neither ²ÝÁñÉçÇø Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from your qualified tax and/or legal professionals to help determine the best options for your particular circumstances.
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