The sooner you start to put your money to work, the better your odds of success. What are some of the actionable elements of life-cycle financial planning? Via Datalign Advisory Actionable Elements That Lead to Success Periodic consultations with seasoned financial advisors can further ensure your fiscal tale remains aligned with your personal milestones, risk tolerance and time frame, as well as with global financial trends and emerging opportunities. These can offer a bird’s-eye view, highlighting potential areas of focus or concern. Graphics enhanced tools-like income generation calculators and asset allocation pie charts-can help you understand your financial progress. Your financial narrative should reflect your aspirations, responsibilities and capabilities, even as each of those evolves. Transitioning through your life stages requires agility, foresight and adaptability. Charting Success in Life-Cycle Financial Planning It’s a time to enjoy the harvest while continuing to manage your finances wisely so your retirement years are comfortable and free of financial stress. Your years of prudent planning finally start to pay off. Given the complexities of this stage, many people seek expert advice from a financial advisor.įinally, you hit retirement. You wonder more about comprehensive healthcare for your retirement years. Your focus is now firmly on building a retirement nest egg. With responsibilities such as children’s education mostly behind you, you’ve got newfound financial latitude. Now that you’re inching toward retirement, you likely want to recalibrate your financial strategies. You enter the fourth phase, your pre-retirement years, around age 45. You focus more on safeguarding assets and protecting loved ones. You start to weigh the value of buying insurance. You think more about diversifying your investments. The financial stakes of your decisions are higher. Life is often vibrant during the family and foundation years, frequently colored by family commitments and aspirations. They also make financial decisions that can influence the decades ahead: What percentage of my income goes to housing? How much can I afford to save? Should I start a 401(k) account, or do I have enough time to do that later? Getting More Serious About Money In the blossoming adulthood phase, people typically take their first steps out into the world. This phase is foundational, teaching teens to distinguish between needs and wants. Torn between saving and spending on enticements like the latest techie gizmo or trendy fashion, teenagers learn to make financial choices. Alongside schoolwork, many teens take part-time jobs that offer an introduction to managing a budget and personal finance. The teenage years are synonymous with discovery. Start with your youthful exploration phase. Let’s take a closer look at your five pivotal phases of life. Retirement, when you can enjoy the fruits of decades of work and planning.ĭiving Deeper Into Your Financial Life Stages Once you’ve built a solid base for generating income, in this second phase you increasingly focus on saving as much of that income as possible and making those savings grow, with an eye to living on them in retirement. The beginning of your career, marked by hard work and foundational financial blueprints. From age 13 to 17.Īt the same time, this arc overlaps with three periods in which people typically take different approaches to wealth: It helps ensure that you’re financially equipped for each next stage of the journey ahead.Ĭonsider your life’s overall financial arc as consisting of five pivotal phases: Life-cycle planning is about knowing where you are-and, crucially, where you’re headed. It helps you navigate the nuanced financial requirements that characterize the different stages of life. What To Know and How To Plan for Each Life StageĪt its core, life-cycle financial planning serves as a personalized compass. From youth to retirement, each chapter of life presents unique financial challenges and exciting opportunities. The overall process can be thought of as life-cycle financial planning. Periodic reexamination of your progress can help you make sure you don’t merely react to life’s unpredictable turns, but rather, proactively shape your financial future. Everyone’s financial roadmap is ever-evolving. A financial plan is more of a marathon than a 50-yard dash.
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