The Road to Financial Independence is Rarely a Short One

Our financial life cycle is rarely short. In fact, there are seven stages I define as being part of the journey.

Stage One: Building the Foundation

Individuals between 20-30 years old with a net worth less than their current annual income, are in this stage. They’re looking to establish an emergency fund, eliminate debt, and begin saving toward retirement.

Stage Two: Early Accumulation
Individuals in this stage are between 30-40. They’ve established their foundation and are looking to grow their net worth.

Stage Three: Rapid Accumulation

Individuals in this stage are between 40-55 years old, and they are in their peak earning years. Assessing their portfolio risk levels and optimizing their tax efficiency should be prioritized. Investment earnings begin to exceed savings.

Stage Four: Financial Independence

In this stage, people ages 55-70 finally have the financial freedom to make choices. They may start a business, semi-retire, or switch to a more rewarding but less financially lucrative career.

Stage Five: Conservation

As individuals move toward retirement, they’re looking to conserve their net worth to continue to live comfortably.

Stage Six: Distribution

Individuals no longer need the wealth they’ve accumulated, and can start considering how they’d like to distribute it to charities or relatives.

Stage Seven: Sunset

The sunset stage is at the end of an individual’s life – they have a short period of time to distribute assets and simplify their estate.

Learn more about these stages in the full article published in Columbia Daily Tribune.

As a financial planner specializing in comprehensive financial planning, Tim enjoys helping clients in Columbia, MO with managing their taxes, financial risks and other financial issues.

If you would like to learn more about this and other personal financial planning topics serviced by Clarity Financial please contact us at 573-447-7007. Clarity Financial, LLC is a fee-only financial advisory firm in Columbia, MO. Appointments are welcome and initial consultations are free. 

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This article is the property of Clarity Financial LLC.