Life Stage Financial Planning

Clients are likely to have differant needs at differant stages of their life cycle. It is , therefore , important to establish a client's life stage to assess his needs accurately. This analysis will prove useful in assessing a client's current needs and also his future needs.

Identify which of the following stage you are at now :

• young unmarried 
• young married 
• young married with children 
• married with older children 
• pre-retirement 
• retirement 

Once you have identified which life-cycle you are at , we will now assess the main needs that are likely to be typical of each life stage.

1. Young Unmarried

A young single working person will want to protect his earnings against disability or long term sickness. Other concerns :

• protection against major illness 
• protection against death if you have dependants 
• savings plan for future needs - marriage , new home 
• hospital & surgical plans 

2. Young Married

Similar to the young single , the young married will also have the following needs ;

• protection of earnings against disability resulting from injury or long term illness 
• protection on diagnosis of major illness and for medical expenses 
• protection on death if there are dependants 
• the need to start on a comprehensive medical/hospitalisation plan 
• also likely for the need for protection in relation to home mortgage loan
• asset accumulation / savings plan 

This category of people may also have short term savings needs for starting a family , going for holidays and long term need of savings for retirement.

3. Young Married With Children

The arrival of children imposes additional needs for the parents. In addition to the above two category's needs , they will also need to save for their children's education. And also provide for their children in the event of anything unfortunate happening that will disrupt the income stream.

• asset enhancement plans
• start retirement planning
• childrens education plans

4. Married With Older Children

Similar needs to category 3 with additional savings needs for affluent lifestyle or for bigger home.

The need to save for retirement becomes increasingly important.

5. Pre-Retirement

at this stage , the children would have grown up , completed their education and become financially independant. education needs are met and there is little need to protect them from the financial consequences of the premature death of parents.

The needs in the following areas remain :

• protection of earnings against disability resulting from injury or long term illness 
• protection on diagnosis of major illness and for medical expenses 
• protection for the dependants on the death of breadwinner
• asset enhancement and conservation
• retirement planning
• portfolio restructuring
• re-investment of income streams  
• purchase of annuities 

Savings for retirement becomes very important. The investment horizon till retirement is short and investments should be in less instruments to reduce the likelihood of capital losses.

6. Retirement 

On retirement , the need is for protection on diagnosis of major illnesses and for medical expenses.

• asset conservation and consumption
• presrvation of capital
• estate planning
• portfolio restructuring

The savings accumulated for retirement needs to be preserved and investments in volatile instruments will be inappropriate. As there is no salary income , a certain level of liquidity in the investments is required ro meet the on-going expenses.

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