Aligning your savings plan to your life stage
In the middle of a crisis it can be difficult to quiet the storm. However, it is important to keep sight of your long-term goals and ensure that your financial plan will continue to meet your needs appropriately as you move through life.
The life stage investment model: is it just for retirement savings?
Life stage investment models are usually referenced within the context of planning for retirement savings, looking at the stages that you go through as a build-up to your retirement. Although this is useful and important, it is also imperative to think about your life stages as a continuum that flows past the point of retirement.
Remember the basics in every life stage
First and foremost, create a budget and stick to it. Your responsibilities and dependants will change as you get older, and it is important to control your debt. When debt is unavoidable, be sure to service it on a regular basis.
Secondly, be sure to take advantage of tax incentives, especially for your retirement savings and tax-free investment products. Many investors miss out on benefits that are freely available and don’t realise that it can make a significant difference to their financial well-being in the long run.
Lastly, remember that your savings and investment products should always be underpinned by the appropriate protection at every life stage. These include:
Medical aid throughout your life
Death, disability and illness cover – especially when you have dependants
Having an adequate will in place
The table below provides an overview of products that are likely to be suitable at different life stages.
Remember that changes and life challenges are part of the journey, and don’t fall into the trap of making short-term decisions based on emotional factors. Always think long-term and stick to your plan. And if you need help constructing a financial plan that is appropriate for your unique needs, a financial adviser will be able to assist.