Financial Life Cycle | The Trust Company (2024)

Which stage of the Financial Life Cycle are you in?

Not everybody fits neatly into each of the stages of the Financial Life Cycle. Our job as trust officers, wealth advisors and CERTIFIED FINANCIAL PLANNER™ professionals is to understand your current situation, your wants and needs. We help you enact a plan that keeps you moving forward through the stages of the Financial Life Cycle so you can ultimately reach your goals.

FORMATIVE STAGES - AGES 0-19

During the formative stages, we form what we believe to be our principles surrounding finances. Many of these principles prove to be relative to our emotions. We learn the value of compounding, which is key to financial independence.

BUILDING THE FOUNDATION - AGES 20-29

Building the foundation is typically the first stage in which we are no longer dependent on our families. While building the financial foundation, net worth is typically less than annual income. This is a great time to get established with The Trust Company’s financial planning team for assistance with debt management and cash flow.

EARLY ACCUMULATION - AGES 30-39

Net worth is beginning to grow and is typically 1-3 times your annual income in the early accumulation stage. Due to the increase in net worth, investors usually begin to take on more risk in the early accumulation stage by diversifying their portfolio. Meeting with the investment team at The Trust Company will be essential in establishing an asset allocation that strives to meet your financial goals.

RAPID ACCUMULATION - AGES 40-54

The key factor of compounding begins to impact our financial life during the rapid accumulation stage. The beliefs we establish in the formative stages begin to become a reality at this point in our lives. Due to an increase in income and wealth, net worth is typically 3-7 times annual income. Discussions with our financial planning team begin to shift focus to retirement planning. However, other aspects such as insurance and estate planning will be significant as well.

FINANCIAL INDEPENDENCE - AGES 55-69

In the financial independence stage, a standard of living has been established and individuals are more focused on how they are spending their time. Income and earnings from your portfolio are typically at an all time high, allowing more flexibility in other areas of life. Net worth shifts from a relation to income to our annual living expenses.

At this point, net worth is typically 7-10 times annual living expenses. Meet with our financial planning team to ensure your retirement projections are on the right track.

CONSERVATION YEARS - AGES 70-84

During the conservation years, risk usually decreases in order to maintain and preserve your retirement income. Although age can vary, typically when your portfolio reaches 10-15 times annual living expenses you have reached the conservation years. Our teams at The Trust Company are here to assist in protecting your assets for the remainder of your life and help plan for your legacy.

DISTRIBUTION YEARS - AGES 65+

A main reason for conservation is to ensure the funds are available for distributions throughout retirement. As your portfolio reaches more than 15 times your annual living expenses, distributions will occur. Those distributions vary based upon your personal goals such as charitable giving or providing for the future generations of your family.