Financial Stages of Life 

The financial stages of life are used by financial advisors and wealth managers to illustrate how retirement planning should start relatively early in a client’s life. We distinguish seven financial stages of life which we will refer to as Education, Early Career, Career Development, Peak Accumulation, Preretirement, Early Retirement, and Late Retirement. 

Financial Stages of Life

On this page, we discuss each of these financial stages of life in more detail and highlight when individuals should start saving for retirement.

The Seven Stages

Education. During the first stage the private client gains knowledge and skills through formal and informal education and apprenticeships. The emphasis in this first stage of life is on building human capital rather than saving money for retirement.

Early Career. The individual typically enters the workforce, starts a family, and starts to assume other personal responsibilities. Saving for retirement usually begins at this stage, although there are many other competing financial goals. Clearly, saving for retirement should start early in life.

Career Development. After becoming established in a career, job skills can continue to expand and upward mobility (promotions) increases further. Financial obligations often increase to fund the college education of the children. Typically, successful individuals start to build substantial financial capital and retirement savings from this stage onwards.

Peak accumulation. Financial capital accumulation is typically greatest in the decade before retirement. During this stage human capital is transformed into financial capital. Wages and the need to accumulate funds for retirement are high.

Preretirement. Emphasis during this particular phase continues to be on accumulating financial capital for retirement and reducing liabilities.

Early retirement. Private clients depend on the cash flows from pension income and their investment portfolio which they should have built in the earlier stages to fund their retirement lifestyle.

Late retirement. Expenses on leisure activities generally decrease, but health care expenses may increase, which will put more pressure on financial resources.


We discussed the 7 stages of the financial life cycle that financial advisors use to help individuals with retirement planning. This analysis is part of a broader analysis to help clients meet goals in retirement.