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In order to get ready for retirement, it is important to know which situation we are in right now. In terms of retirement planning, there are 4 different phases of life cycle financially. Today, we will briefly describe them as each cycle deserves more than full post itself |
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Unaware: 15 to 35 years old
While writing this post, I thought of putting the “unaware” cycle from 18 to 99 years old 
Some people will never know that they need to plan for their retirement. They think that it’s the responsibility of their employer or the government. Unfortunately, this is not true anymore. You need to take care of your own retirement plan.
Therefore, if you have children, I strongly suggest that you educate them on the power of saving on a monthly basis as soon as they get their first paycheque (this is why I start this cylcle so young). Most people won’t even want to hear about retirement before the age of 35. In the meantime, they are busy partying, studying, finding the right spouse, buying a house and having children.
Accumulation: 35 to 50 years old
During the accumulation period, people face several challenges: they need money to pay off their mortgage, their kids’ education, vacations and they still need to put money aside for retirement. Which should we do first, pay off the mortgage and then think about retirement? How can I get a life and save money at the same time?
This is one of the most important stages of your financial life as it determines which kind of retirement you will benefit from.
Transition: 50 to 65 years old
The children are gone (or about to leave), you already have a decent amount set aside for retirement and you may be tired of your actual job. You think about a career shift, early retirement or starting your own company.
But the real question is; can you afford these changes? During the transition period, you will have several existential questions on how you want your “second life” to be. This is where most people are more receptive about retirement planning. While it’s a bit late, better late than never!
Withdrawal: 65 and older
The game is over in term of accumulation. You now need to plan carefully how you will withdraw your money in order to live comfortably without surviving your capital.
Your investment strategy needs to be reviewed one more time and insurance strategies are starting to be more interesting in terms of estate planning. Don’t be too quick to withdraw your money as you might live longer than you think!
The ages mentioned beside each phase is only a guideline. Some people will remain “unaware” for the rest of their lives while others will enter in the accumulation process at the age of 18. The key is to get into the accumulation period as soon as possible and stay there for a while.
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