Accumulation of Wealth Through the Person's Aging Process

Wealth accumulation, preservation, and distribution play a role in our financial picture throughout our lives. Primarily because over time our priorities change. As we get closer to retirement our investment strategies might need to be altered. For most people in their 30s and 40s the goal is wealth accumulation. During this time, making investments and saving to accumulate as much wealth as possible for retirement is the main goal. Later in life the goal becomes wealth preservation. This is when our investments tend to be more conservative and risk management and tax reduction support our goal of making our assets last as long as possible.

Working with a financial advisor is an easy way for not only investors but any individual to adjust their approach to wealth during each stage in their life. Earlier in life, advisors encourage their clients to invest in their growth for various reasons. Usually there is a substantial amount of time prior to retirement. Studies consistently show that stocks typically outperform fixed-rate investments and savings accounts long-term. As your personal income increases you can usually postpone increasingly greater portions of your salary towards retirement savings. Maximum earning potential usually happens in a person’s 40s. During this time, a person’s portfolios might shift toward a mixture of wealth accumulation and preservation strategies as well as additional investments.

As people get older, the shift to asset preservation becomes more evident. However, individuals typically still keep some wealth accumulation investments in their portfolios. Often this is due to financial advisors discussing asset allocation plans to create recurring income streams. This prevents impeding future growth potential. Obviously, the ideal allocation plan makes the investor feel as comfortable as possible. Some people remain in the accumulation phase until their 60s and 70s, either due to wanting to or out of obligation. Either way, today this is pretty rare. Saving for retirement could have begun at a postponed stage, an unforeseen financial crisis, or the person has a very successful career and doesn’t see a reason to slow down. There will still be a similar shift to wealth protection just at later point in life. On the other hand, some people in their 40s and 50s who do not have any retirement savings at all. In these cases, a financial advisor would suggest establishing an aggressive investment strategy in order to get on the right track. Of course, this would be a risky move in and of itself and careful considered with a trusted financial advisor competent with working in these delicate situations is paramount.

Wealth distribution requires meticulous examination, judicious guidance, and clever changes. Retirement savings reinvestment and management, scheduled practical withdrawals, tax efficiency and reduction, estate planning, risk protection are some things to consider during this time. If wealth preservation is not on the forefront and one is getting close to retirement, this is a perfect time to reorganize a financial strategy to best utilize your assets and to aid in making intelligent choices. This is also a great opportunity to reach out to a skilled financial advisor and discuss shifting from wealth accumulation to wealth preservation in order to be prepared for wealth distribution prior to retirement.