Financial planning is never a one-size-fits-all endeavour, but rather an evolving process that mirrors the different stages of our lives. As we move from one life phase to the next, our financial priorities naturally shift—some becoming more pressing, others less relevant. Recognising these stages and proactively adjusting your strategy can be the key to long-term financial wellbeing. In this article, we explore the key life stages and the financial interventions best suited to each.
Single and starting out
As you begin your working life, this is the time to lay strong financial foundations. Your first salary marks the start of your accumulation phase—the stage where your income enables you to create wealth for the future. While retirement may seem a distant concern, thinking about financial independence now will empower you later in life.
If early retirement or financial freedom is your goal, now is the ideal time to draft a plan and begin working towards it. Even if you’re not able to contribute the maximum tax-deductible amount (27.5% of taxable income) to a retirement fund, begin with what you can afford and increase your contributions as your income grows. In addition to saving, protecting your ability to earn is crucial. Income protection cover is essential to secure your lifestyle if you become temporarily or permanently disabled. This type of insurance can be complex, so it’s advisable to consult with an independent financial advisor who can match your policy to your unique risk profile and occupation.
Setting up an emergency fund is another fundamental step. Aim to save at least three to six months’ worth of expenses in a dedicated account to cover unexpected events. Without this buffer, you may be forced to take on expensive debt. Also, ensure you are a member of a registered South African medical aid keeping in mind that most open schemes offer affordable, entry-level network options for young earners.
Marriage and financial partnership
Marriage often brings the merging of finances and shared responsibilities. Your insurance needs will change, particularly if you’ve purchased a home together. In this case, you may need life cover equivalent to your bond, as well as cover to provide for your spouse should you pass away. Further, updating your Wills becomes essential to ensure each spouse is adequately provided for in the event of tragedy. This is also the right time to agree on a household budget, clarify how joint expenses will be managed, and determine how you will save and invest together. It generally makes sense to join the same medical aid scheme and reassess the option that best suits your combined healthcare needs.
From an investment perspective, start crafting a joint retirement plan. Even if your retirement dates are far off, setting a shared vision and investment strategy now will help ensure that you’re aligned. With a long-term horizon, consider allocating a higher proportion of your investments to growth assets. Striking the right balance between saving for retirement and building a discretionary portfolio is key. Your discretionary investments can be used for more immediate expenses such as home renovations, travel, or vehicle upgrades.
Raising children and managing competing demands
The birth of a child introduces significant responsibilities and a need to reassess your financial plan. Notably, your Will should be updated to nominate a legal guardian and to provide for a testamentary trust to protect your child’s inheritance should both parents pass away. You will likely need to increase your life cover to ensure your children are financially supported if something happens to you. Education planning should begin as early as possible, using tax-free savings accounts or collective investment schemes to build funds for school and university expenses.
This phase is often referred to as the ‘lean years’. Managing a bond, paying school fees, saving for retirement, and covering daily expenses can feel overwhelming, and it’s easy to lose sight of long-term goals. Although this period can feel financially constrained, it is also temporary. As debts are paid off and children become more independent, your financial breathing room will grow—providing opportunities to refocus on wealth building.
Empty nest and pre-retirement planning
Once your children are financially independent and debts are reduced, your focus shifts to preparing for retirement. This is an opportune time to reassess your insurance needs. You may be able to reduce your life cover and redirect those premiums towards retirement savings or discretionary investments. With less pressure on cash flow, you may be able to increase your retirement contributions and consider topping up your retirement annuity. If your home and vehicles are paid off, consider investing that surplus strategically—aiming for tax efficiency while maintaining access to liquid funds for travel, major purchases, or emergencies.
Estate planning becomes increasingly important. Review your Will to ensure it aligns with your current wishes and structure your estate to support your wealth transference goals. If your estate is more complex, speak to an estate planning specialist to ensure that tax, liquidity, and administrative matters are properly handled. Also, keep in mind that healthcare becomes a major focus at this stage. Consider upgrading to a more comprehensive medical aid and ensure you have comprehensive gap cover in place.
This is also an opportune time to evaluate your accommodation requirements. Many people in this life stage choose to downscale to smaller, low-maintenance properties that frees up capital and makes travel easier. A retirement planner can help you reinvest any proceeds from a property sale to strengthen your income strategy.
Retirement and drawing an income
Formal retirement marks a shift from accumulation to income drawdown, and this transition requires careful planning. Decisions include when to retire, which type of annuity to purchase, what drawdown rate to apply, and how to invest post-retirement. These choices can have long-term consequences and are best made with professional guidance. A retirement specialist can help you design an income plan that suits your lifestyle, balances security and flexibility, and ensures your money lasts as long as you do.
Planning for care in later life is also essential. Consider the cost of assisted living, home nursing, or frail care, and understand the waiting lists associated with popular retirement facilities—many of which require applications a decade in advance. Incorporate these costs into your cashflow planning and make provisions early.
Later life and safeguarding your legacy
As you reach advanced age, ensuring your estate is well structured becomes a priority. Review your Will, ensure your estate has sufficient liquidity, and evaluate whether your assets are appropriately allocated. If physical or mental incapacity becomes a concern, consider appointing someone with a general power of attorney while you are still competent. Bear in mind that a power of attorney becomes invalid if you lose mental capacity. If there is a significant risk of dementia, consult a legal professional about setting up a trust or appointing a curator in advance.
Staying financially engaged in later life is important, with many older individuals feeling vulnerable or isolated when it comes to managing money. Further, it is important to maintain digital literacy and a strong support network to help ensure your independence and protect your financial wellbeing.
Each life stage brings its own set of financial challenges and opportunities. By proactively adapting your financial plan to reflect where you are in life, you can maintain control over your future and create peace of mind for yourself and your loved ones. While your priorities may shift over time, the core principles of disciplined saving, risk management, and future-focused planning will serve you well throughout every phase of your journey.
Have a wonderful day.
Sue
