Financial planning is a lifelong task, and from that vantage point, it can seem pretty overwhelming. Luckily, financial planning can break down into four predominant phases, which not only helps simplify the whole process but gives you an idea of where you are now in life and what you can expect — and should plan for — in the years ahead.
As Bernard Krooks writes in Forbes, each financial planning phase has its own goals and caters to unique age groups:
- Accumulation (Age 20-50): This is the longest of the phases and also the most important — after all, this is when you build the nest egg that your family, your business and yourself will be living off for years to come. “This period begins when you enter the workforce and begin setting aside funds for later in your life, and ends when you actually retire,” notes Krooks. Take advantage of retirement plans — if offered by your employer — and remember that today’s benchmark for normal requires savings rates of over 10 percent.
- Pre-Retirement (Age 50-65): This is when you need to cut back on financial risks and be more conservative with your investments. Start looking at converting your retirement savings from the accumulation phase into a steady income stream.
- Retirement (Age 65 and up): Hopefully by now you’ve retired, which means you’ll be spending the next 20 to 30 years living off the money you stashed away during the first two phases. Consider tax liabilities and withdrawal orders to ensure that your income stays consistent and long-lasting.
- After death: This is the one nobody likes to think of, but that’s no reason to ignore it! Proper planning for this phase helps guarantee that your loved ones will be cared for after you’re gone.
A key aspect of smart financial planning is to make an affordable life insurance investment — the sooner in life, the better. For help in finding the best options for you, request a quote from Local Life Agents today. Also check out our 20 year term life insurance rate chart here. You don’t need to run a quote to see how affordable life insurance can be.