What is a Life Span Investment Strategy?
There are several stages in your financial life. Each stage requires specialized knowledge on the part of the financial advisor.
This article describes how you benefit from planning and investment services that transition with the seven stages of your financial life.
Longevity is a financial game changer. Due to medical science and healthier lifestyles you and/or your spouse may live several years longer than your parents or grandparents.
Less than 1% of the U.S. population currently reaches age 100. That percentage will be much higher in the future and so will expenses for assisted living, skilled nursing, and memory care. The longer medical science and services keep you alive the more assets you will need to maintain a comfortable lifestyle.
Another side-effect of longevity is working longer. You may choose to work part-time or full-time into your 70’s.
In general, you have to accumulate more assets and invest them more wisely to make sure you have adequate financial security late in life.
We describe several financial goals in this article. We also recognize everyone has a need for financial security during working years, early/mid retirement years, and late in life when they need it the most.
Therefore, some assets are being accumulated and invested for financial security during working and retirement years.
Three Stages of Working Years
Working years are not one stage. There are three stages that have different financial plans and investment strategies: Early, Mid, and Late.
Early working years are described as just getting started. You are in your 20’s and 30’s, you are getting married, starting a family, and launching a career or business.
Mid working years are in your 40’s and 50’s. You are established in your career or business and your children are leaving for college.
Late working years can be mid 50’s into your 60’s. At this point, your principal financial interest is maximizing assets for retirement and creating a great lifestyle for your retirement years.
The Transition Years
One of the most dangerous periods for your financial life is the transition years. In fact, we describe these years as the Risk Zone.
You should be very cautious when you are in the Risk Zone transitioning from working years to retirement years. A down market at the wrong time can produce catastrophic consequences. Just ask the people who retired in 2002 or 2008 when there were severe market declines.
Three Stages of Retirement Years
Retirement years are not one stage. Just like working years, there are three stages: Early, Mid, Late.
Early retirement years are described as just getting started in a new phase. You are in your 60’s or early 70s. You are taking trips on your bucket list. Perhaps you are relocating to Arizona or Florida.
Mid retirement years are late 70’s into your early to mid-80’s. You are settling into a lifestyle that is more involved with family, some travel, and continuing personal interests.
Late retirement years can be late 80’s and 90’s. There is a good chance these are your most expensive retirement years depending on the health of you and your spouse. And, because you are late in life you have very few options. Either you can afford your cost of living or you can’t.
GlidePath Wealth Management
GlidePath provides a seamless transition from one phase of your financial life to the next.
You do not have to change advisors or strategies when you move to the next phase. We automatically update your financial plan for the next phase and make the necessary changes to your investment strategy for you.