Life Stages
What is your Life Stage?
Strategic advice is hinged upon your financial goals and your current Life Stage. We have outlined the general life stages to help you identify the financial action you should be considering today.
- Starting Out
- Growing Demands
- Wealth Accumulation
- Towards Financial Independence
- Changing Priorities
- Retirement
| Starting Out | Consumption versus commitments This stage brings your first job, income and bank accounts. It's also the time of first debts, obligations, rent, credit cards. Here you'll meet the concept of saving via compulsory super and the dilemma of saving for a home deposit or travel. |
Strategy A budget is crucial! Living within your means sounds simple, however we run up substantial in the name of consumption. Identify the amount you can devote to longer term growth savings and make it regular and disciplined. The earlier you start, the sooner financial independence will be achieved. |
| Growing Demands | Growing indebtedness and demands This stage sees greater career demands, a first home mortgage, partnerships and marriage, as well as young children. You may be reduced to one income and thinking about education savings. You’ll also seek protection from perils through insurance and via a Will and Power of Attorney. |
Strategy Budgeting and debt management are critical. Reducing non-deductible debt like a home mortgage is important. A mortgage offset account can be helpful. Consider salary sacrifice to superannuation, longer term education savings via regular managed funds and income splitting of investment income. Legal advice regarding a Will should be sought. Protect your biggest asset - the ability to earn income - by a suitable insurance policy. Quite often adequate life insurance cover can be achieved through superannuation, but once again seek advice. |
| Wealth Accumulation | Light at the end of the tunnel Your career is usually settled. With reduced levels of debt it’s time to think about further wealth creation options. Perhaps you have a family growing up, with education expenses to meet. You may be in a better position to salary sacrifice so you can upgrade your home, take a holiday or make a big purchase you have dreamt about! |
Strategy Reward yourself but do not over consume at the expense of your longer term investment goals. Invest in growth assets within your superannuation, and consider gearing as cash flows improve. Ensure you have an appropriate level of insurance protection to cover your financial commitments. Enjoy and spend time with your growing family. |
| Towards Financial Independence | Seriously saving for retirement You could be at the peak of career earnings and discretionary income as your savings increase and your debts are paid off. Health and lifestyle issues emerge as children begin to leave the nest, or as aged parents need care. Inheritances are likely. |
Strategy It's critical to establish your ability to save. Revisit the budget planner to identify savings via salary sacrifice, spouse super contributions, improving tax efficiencies of savings and staying healthy. Gearing levels should have peaked and begun to wind down if 55 year of age is your retirement goal. |
| Changing Priorities | Restoring the balance This stage sees active retirement preparation, a downsized home and part-time work. Health considerations are paramount, savings and investments critical, budgets are revisited, increased financial education is vital. |
Strategy Debt reduction is the key. As you edge closer to retirement, a more defensive investment approach may be warranted. Insurance needs (except health) should diminish. Super should be maximised, however watch your Reasonable Benefit Limit (RBL) position. |
| Retirement | Financial Independence This is what you’ve worked hard for. Retirement allows pursuit of hobbies, new interests and travel. Time to keep healthy and active. Monitor investments, adjust income, attend to estate planning. Check age pension entitlements. Income requirements may be higher in the early years of retirement, as some expenses such as health, may increase. |
Strategy Investments should still contain an element of growth, however maximising income is the key. Allocated pensions are very tax effective. Don't worry about things you cannot control and enjoy the fruits of your lifetime labour. |
Previous page: Strategic Advice
Next page: Wealth Creation