Your Financial Life Cycle

There are four basic lifecycle stages that individuals may transition through during their financial lifetimes. During each lifecycle stage, certain financial goals and objectives are predominant.

Accumulation
During the accumulation phase, represents a period prior to retirement, focusing on issues ranging from: mortgage financing, managing debt and cash flow, saving for retirement, and financing college education for their children.

Distribution
During the distribution phase, which basically begins at retirement, financial goals and objectives usually become more focused on developing an appropriate investment strategy for retirement, managing risk, reducing income taxes, and maintaining a desired standard of living.

Preservation
The preservation phase starts further into retirement as a person's focus generally shifts to asset management, asset protection, maintaining adequate income and handling the impact of inflation.

Transfer
The transfer phase occurs in the later stages of retirement, when financial goals tend to focus more on transferring wealth to the next generation, minimizing the impact of estate settlement costs and taxes, and possibly providing for chartiable organization.

People often confuse investing with financial planning. The financal planning process involves analyzing your personal situation, determining which financial strategies to pursue, and taking specific action to implement those strategies. A written financial plan becomes a road map for charting your course as you work towards your financial goals. This section explains key planning considerations for you and your family.

For financial advisors to help clients make informed decisions during each of these phases, it is critical for financial planning software, tools and techniques to be as sophisticated and flexible as the various lifecycles and transitions are challenging.