The Financial Life Cycle is a model for visualizing the progressive stages we all go through in life on our personal financial journey. EWM advisors use this model to help clients clearly identify where they are in their financial life. When people understand where they are on this journey they are inspired to take action and make better decisions.

The Stages of the Financial Life Cycle – Your Financial Journey

Matterhorn in early morning and trekker with outdoor equipment , Zermatt, Switzerland

  • Accumulation
  • Consolidation
  • Preservation
  • Distribution
  • Transfer

Accumulation is the first stage of the Financial Life Cycle where growth is the main focus. Ideally you should be in this phase when you are younger and starting out in your professional working life. Here is where you should begin your systematic savings plan. Based on what you can afford, make automatic contributions into your 401k plan. If you have a family it’s very important in this stage to have life insurance. The Accumulation stage can be 20-30 years in duration. The objective is growth.

Consolidation is the second stage of the Financial Life Cycle. At this point you are far more established having paid off most of your debts and built a nest egg of savings over the past 20-30 years. In this phase you are beginning to bring all of your assets together to make future planning decisions clear and easy. The objective is effective organization.

Preservation is the third stage of the Financial Life Cycle. The focus at this point is to preserve and protect what you’ve accumulated over the years. In the two previous stages investments were managed for growth. Now you are more conservative. You are already retired or close to it at this point on your journey.

Distribution is the fourth stage of the Financial Life Cycle. It is the most critical because you are now taking funds out of your accounts to maintain your quality of life in retirement. Combined with social security these withdrawals must be adequate to sustain you in what we hope is a long retirement. It is critical here that you are not depleting the assets in the account at a pace that puts you in jeopardy of out living your money.

Transfer is the fifth stage of the Financial Life Cycle.

group of graduation girls looking very happy

This is where your Will and other documents dictate what should happen after you have passed. What’s critical here is that you have done your planning well in advance. EWM strategic partners play an important role in preparing you for this stage of the journey. You have a tremendous opportunity to transfer wealth to future generations and secure your legacy.

EWM will advise you appropriately through each stage of your personal financial journey. We have the experience to help you wherever you are currently on this journey. We will collaborate and coordinate with our strategic partners or other professionals that you may prefer due to an existing relationship. EWM is ready to successfully achieve your goals.