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Are you in the Preservation Phase?

There are three phases people pass through during their wealth journey. The first is The Accumulation Phase, where the focus is on financial growth. Nearing retirement, people's tolerance for riskier, more aggressive investments lowers and they transition into The Preservation Phase. Once someone retires, they pull from their financial assets in The Distribution Phase.

Are you in your forties or fifties and looking to retire sooner than later? Maybe you're a little older but still working? Perhaps retirement is a five or ten years down the road? You're likely sitting in The Preservation Phase. This is where you transition from growing to safeguarding your wealth.

When you're younger and accumulating your wealth, with retirement a long way away, you can take a more aggressive investment strategy. One that's riskier: involving higher return potential with a higher chance of losses. This can accumulate wealth faster than a less aggressive strategy. But, as you get older, your tolerance for risky investments lowers. Retirement is coming and you don't want to gamble with your hard-earned money. With a lower tolerance for risky investments, You'll need a plan that will continue to help your assets grow, but now in a way that minimizes risk and helps to protect against losses. 

A well-thought out financial plan can help ensure that your wealth grows in a steady manner so you can enjoy healthy distribution phase. This plan, depending on your individual situation, may outline reinvestment strategies; examine ways to both reduce your taxes and make sure your investments and transfers are tax efficient; and include a plan for your estate; and much more. 

Some problems you might face in The Preservation Phase include: 

  • Volatility in the stock market. 

  • Taxes eating away your investments

  • Becoming empty-nesters and downsizing or cutting your expenses. 

  • Health concerns.

  • Divorce

  • Too much debt

Elizabeth O'Donnell is a financial advisor in Denver, Colorado and cares about creating a financial plan that fits your lifestyle. Initial consultations with her are complimentary and can be done by phone or by a Zoom video meeting. This initial consultation is used to learn more about who you are, what your financial situation is, and whether our services are a match for you. 

Schedule your complimentary consultation call with 

Elizabeth O'Donnell | CFP® | MBA

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