Life stages

Our changing ability to earn, along with our ever changing needs and preferences define our 'financial life cycle' ...

At each stage we develop different wants and needs, & as we pass through each stage, our ability to earn income changes.

Our financial advisors are here to help you make important decisions about your finances with confidence. The financial life cycle is typically defined by four distinct stages, as follows:

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1. Accumulation

This is the first stage of the financial lifecycle, and usually begins when you first start to earn an income, & generally lasts into your late 30s.

The focus at this stage should be the accumulation of wealth while being disciplined with your money by clearing debts, and investing as much as possible early on. Retirement is still far in the future, so you can afford to take more risk as you will have more time to ride out market fluctuations. Those at this stage of the cycle will typically have the following profile:

Age: 20s - late 30s
Focus: Career building & asset accumulation
Saving capacity: Low
Long-term concerns: Asset accumulation, starting a family, children's education, retirement planning, capital appreciation
Short-term concerns: Housing, car, debt repayment

2. Savings

This is the second stage in the financial lifecycle when you will have a greater ability to save, & generally lasts into your late mid to late 40s. The focus at this stage should be on saving and investments to build a secure future ...

During this stage most people will typically be reaching their peak income level. It may be a time of relative freedom when children have finished their education, flown the nest and are now starting to earn their own incomes. This stage can also however be a time of financial strain because later age divorce is on the rise. Generally however most people at this stage are able to accelerate their savings and investments to position themselves for a more secure retirement.

Age: 30s - mid/late 40s
Focus: Asset accumulation & enhancement
Saving capacity: Increasing
Long-term concerns: Asset enhancement, children’s tertiary education, retirement planning, starting a business, upgrading house, capital appreciation
Short-term concerns: Asset accumulation, debt repayment, children’s, education

3. Pre-retirement

This is the third stage of the financial lifecycle, and generally lasts into your late 40s. The priority at this stage should on be making sure your assets and investments are optimised for future income ...

Generally, about three to six years before winding down your professional career many people will start to look at restructuring assets and investments in order to reduce risk and increase income. By this stage mortgages have usually been paid off and children are now independent. This is the time to evaluate your retirement plan distribution options and the tax consequences of investments.

Age: mid 40s - late 50s
Focus: Optimising assets and investments
Saving capacity: High
Long-term concerns: Asset conservation, retirement planning, portfolio restructuring, reinvesting income streams, capital appreciation & income.
Short-term concerns: Asset enhancement, debt repayment, starting a business, upgrading house.

4. Retirement

The last stage of the financial lifecycle occurs for most people in their mid to late sixties and beyond.

The goal at this stage is to preserve your purchasing power so you can enjoy the lifestyle you desire. Once people have stopped working the focus shifts from wealth accumulation to income preservation, and greater prominence is also given to legacy considerations and estate planning.

Age: Late 50s onwards
Focus: Preserve your Income and purchasing power
Saving capacity: Decreasing
Long-term concerns: Asset consumption, estate planning, preservation of capital, high income.
Short-term concerns: Asset conservation, gifting, portfolio restructuring.

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