Within any Financial Life Plan there are phases of our lives that require different strategies.
Early stage
When we are still single or just starting a family, protection for the future plays a large role. Living benefits and term life insurance often will play a large role as we assume large debts for a vehicle, home and provision for our family if something should happen. Although retirement may still be a long way off it is important to be thinking in this direction as well. Even saving for a “rainy day” can be meaningful at this stage of our lives.
Middle stage
As time goes on and our children are in their late teens there are often different objectives. This has been referred to the “sandwich generation” as we often still have children at home while we are also providing a greater level of care for aging parents. We begin to look for ways to have more “free” time. As debts get paid down and future responsibilities lessen we can review our live insurance needs. We will not have as much debt; our children are closer to going out on their own; and we are beginning to wonder how much we will have to live on when we retire. It is time to do an in depth review of changes that may have taken place in our Financial Life Plan. Permanent life insurance products, long term care insurance and investment products take on a whole new meaning.
Pre-retirement stage
This is a time in our lives when we like to know what our retirement will look like. We need to reassess our investment strategies. If we have been accumulating our savings in equities we are more than familiar with the “ride” we can get as markets soar upward and slide down again. Throughout our lives we have been able to ride these waves because time has been on our side. But as retirement gets closer, and we may want to access these investments, we become concerned about what effect a prolonged market turndown could do to our plans. At this point we need products with guarantees – such as GIC’s or segregated funds with lifetime Guaranteed Minimum Withdrawals.
Retirement
We have made it! Now we have to keep it so we can enjoy the fruits of the Financial Life Plan we set up seemingly not so long ago. Emphasis now is on maintaining our level of income, not losing our investments, and passing our estate to our children and grandchildren in a tax efficient manner. There may be specific charities that we want to recognize or scholarships we wish to set up. This is a time in our life to reflect on the past and provide for the future.