Financial Life Stages

Coin stack with young green sprout on top as a money grown concept.

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Financial Life Stages

A person goes through financial stages throughout life: accumulationbuilding, and retirement years. Each life stage has a set of actions to take based on needs. Those actions may include buying a house, purchasing a car, starting a family, saving for retirement, and dealing with illness or death. Knowing the different financial life stages allows us to understand the big picture of our financial needs and how to prepare for them.

Here is more information about each financial life stage and some recommendations for each of them:

Financial Life Stage: Accumulation

The accumulation stage starts when the person enters the workforce and culminates at the time of retirement. During this stage is the time to start saving for retirement through 401K, IRAsannuities, investment portfolios, or life insurance policies. The earlier the person begins saving for retirement, the better.

Other things to do during this stage are:

  • Learn to live within your means
  • Receive personal finances training
  • Establish a monthly budget
  • Develop savings habits
  • Create an emergency fund
  • Avoid building high-interest debts
  • Pay debts as soon as possible
  • Build good credit

Financial Life Stage: Time to Build

The time to build begins once people decide to settle down or start a family. This stage comes with more responsibilities and significant expenses, such as a wedding, buying a home, and having children. The purchase of a home is one of the most significant expenses in the life of an adult. Buying a home also includes expenses in interest, insurance, amortization, maintenance, and utilities. Other actions to take during this stage are:

Last Stage: Retirement years

Retirement also has different stages that start a few years before and after you retire. If you performed well during the accumulation and building phase, now will be the time to enjoy the results of your efforts in earlier years.

Other actions to take during this stage are:

  • Turn retirement savings into a source of income
  • Consult with a financial advisor on the best way to maximize your retirement savings and taxes
  • Get rid of assets you don’t need
  • Explore the potential health needs during this stage and prepare appropriately for them.

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About Jessimar Lopez

Jessimar Lopez graduated from the University of Puerto Rico Río Piedras Campus with a bachelor’s degree in audiovisual communications and participated in a study abroad internship at the University of Málaga with the sponsorship of the Benjamin G. Gilman Scholarship. She joined the Empower Brokerage team in 2022 as a videographer and editor.

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