Chapter 2

Question 1

Describe the three stages of the PERSONAL FINANCIAL LIFECYCLE.

Answer 1

1. The VULNERABLE YEARS (20s) - early years of a marriage/long-term relationship and the starting of a family.
2. The RELAXED YEARS (40s) - most couples have an increased income and are in good health. Their children are reaching financial independence and their own parents don’t yet need daily care.
3. The ANXIOUS YEARS (50+) - earning power is peaking, mortgage is nearly paid off, more disposable income, BUT as friends die or become ill the spectre of death hangs over them, cost of protection cover increases substantially, there is little time to make up any gaps in pension provision, the cost of long-term care becomes a concern.