Life’s Four Financial Seasons
Each of the four seasons of the year has its own distinctive colors, scents, and activities. And, here in Michigan we get to enjoy all four of them. The thrill of summer’s warmth is getting folded up like our shorts and bathing suits and giving way to the chill that brings out our favorite sweaters and the scent of apples and pumpkins and spiced mulled ciders. Before long, the icy whiteness of winter will have us bundling up in front of a crackling fireplace dreaming about the brilliant colors and activities of the coming spring season.
When you stop to think about it, life has four very distinct financial seasons too. There are specific activities associated with each season as well. When you do think of life in this way, and follow the activities of each season, it helps each unfold as effortlessly as Mother Nature’s seasons. As I see it, the financial seasons do not actually line up with the repetitive summer, fall, winter and spring. After all, our life here, while we get to experience the annual seasons multiple times, our financial seasons are limited.
How I Define The Four Financial Seasons
I think of the four financial seasons as 1) the season of Gathering and Growth, 2) The season of Continued Growth And Preservation, 3) the season of Harvest and Maintenance, and 4) The season of Gifting.
1) Gathering and Growth – ages 20 to 55. Unlike Mother Nature’s summer growth season which is very short, the financial gathering and growth season is the longest. What you do during this time sets you up for the rest of your life. You want to put money aside, accumulate wealth and lay the foundation for your financial future. This is when you set your financial objectives and begin to save and invest. If your employer offers an employer-sponsored retirement plan, by all means leverage it and do all you can to save, grow for the future. This is a great time to work with a fiduciary financial planner.
2) Continued Growth and Preservation – ages 55 to 65. With the onset of this season, the key is to make sure you protect the money you have worked to save for retirement. Now’s the time to review and assess your risk tolerance. While you still want growth, it may be slower more conservative growth.
3) Harvest and Maintenance – ages 65+. At this stage, if you have taken action during the previous seasons, you’ll be in a position to have the lifestyle you planned for and dreamed about. Sure, there are items you’ll want to continue to discuss with your financial advisor, such as tax liabilities in retirement and when you withdraw from retirement savings. This is the season you’ve been working toward. And it’s now time to start planning for the next season.
4) Gifting –The last season is the one in which you decide what to do with your assets after you pass away. You may already have a plan in place for this season, one that you established in the previous season, but if not, and if you are still lucid, this is the time to establish how and to whom you want your lifetime’s financial and other assets distributed.
Seasons Come And Seasons Go More Quickly With Each Passing Year
I don’t know about you, but the older I get, it seems the faster time flies! I hear many of my clients and friends say the same thing. That’s why I encourage prospective clients to not miss any of the financial seasons of life I encourage everyone to do the best they can at every phase of life to keep moving toward that final financial season. If you’d like to get started with a plan for the autumn of your life, give my office a call. We love all the seasons, those provided by Mother Nature and the necessities of life.