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General Investing

The Investor Life Cycle: Where Are You?

An investor’s financial goals and risk profiles change over time. Generally, wealth is built according to four stages in life, from early accumulation to retirement.

Four investors at different stages of life, planning for their future.

Your goals for money depend highly on your age and time to retirement.

Early on, you want your earnings and investments to grow. You want to jump-start your retirement plans and potentially save for a house. Once you retire, you may want to play it a little safer and focus on having your investments last for the remainder of your life.

As you move through the four stages of your investor life cycle, your goals change, and your investment plan should also change to reflect where you are.

The Investor Life Cycle

Hypothetical Asset Accumulation Over Time

Investor Life Cycle Graph: Early Accumulation, age 20-39; Late Accumulation, age 40-54; Pre-Retirement, age 55-64; In Retirement, age 65+.

Source: American Century Investments. The illustration demonstrates how investors may have different needs or considerations as they age and as their assets grow.

Let's go over each stage and meet investors seeking guidance relevant to where they are on their paths. See if any of their stories resonate as you create your financial road map.

Choose a Stage

Early Accumulation

You’re just starting your career and have more time to add to your investments.

Late Accumulation

You may be in your peak earning years at work and are continuing to build wealth.


You’re counting down to your last paycheck and making preparations for retirement.

In Retirement

You’ve put your plan into action and want to make your money last.

Early Accumulation: Establish Good Investing Habits

The first phase of the investor life cycle is the early accumulation phase. Early accumulators are typically 20 to 39 years old and just starting their careers. Time is on their side, so these investors can generally take on more risk with investments. If they experience market declines, they have the most time to potentially make up those losses by working, increasing their income and investing.

Goals in the early accumulation phase often include:

  • Making a budget

  • Tracking cash flow

  • Establishing emergency savings

  • Creating a financial plan—specifically about managing debt (student loans, credit card debt, etc.)

  • Saving for children's education

  • Saving for retirement—contribute to an employer-sponsored match

  • Starting to build non-retirement wealth

Meet Erika

Erika graduated a few years ago and just received a promotion at work. She finally feels like she's making some “real money.” Even so, she’s a bit overwhelmed these days. Should she pay off her student debt before investing, she wonders? But she wants to save for a house too.

Erika engaged a financial advisor to help her sort through her goals for her first financial plan. Together, they decided how she would pay down debt and save for an emergency and a house.

Being in the first financial stage, Erika benefits the most from time due to compound interest on her investments. If she invests for 20 years starting at age 25 versus starting at age 45, she has the potential to earn three times as much by the time she’s 65. The additional years of compounding make all the difference.

The Benefits of Starting Early

Hypothetical Example

The Benefits of Starting Early, Hypothetical Example.

Source: American Century Investments, 2022, Investment Rate of Return Calculator. The hypothetical calculation assumes an annual contribution of $2,500, earning a rate of 6% annually over 20 years, plus an additional 20 years at 6% with no additional contributions. It assumes reinvestment of all realized gains, dividends, and interest receipts and does not account for the effects of any added fees, expenses, or taxes that might be incurred. If all taxes, fees, and expenses were reflected, reported portfolio values would be lower. This hypothetical situation contains assumptions that are intended for illustrative purposes only and are not representative of the performance of any security. There is no assurance similar results can be achieved, and this information should not be relied upon as a specific recommendation to buy or sell securities.
Financial Calculators from
Financial Calculators ©1998-2022 KJE Computer Solutions, LLC

It's no guarantee, but the moral of the story is that Erika may significantly benefit from building her wealth and retirement fund early.

Erika feels good that she's now on a path to investing for all her goals.

Late Accumulation Stage: Make Use of Peak Earnings

The second stage of the financial life cycle is the late accumulation phase. Late accumulators are generally ages 40 to 54 and are in their peak earning years at work. Many have lived through a recession or two and understand the need to keep building wealth to protect against life’s uncertainties. This investor is generally still investing for growth but may move toward more of a balanced approach between stocks, bonds, real estate, etc. as they age.

Goals for the late accumulation phase often include:

  • Funding children’s education

  • Buying real estate

  • Aggregating accounts/consolidating accounts

  • Maxing out tax-deferred account options

  • Growing non-retirement wealth

Meet Lainey

Lainey is a busy business owner in her mid-40s. Since her divorce, Lainey now finds herself in charge of her finances. She wants to make sure she can afford to send her two kids, ages 8 and 10, to college but can't ignore the fact that she must consider her retirement. Lainey is looking for someone to help her re-establish goals for her new life.

Lainey found a financial advisor who will work with her, meeting Lainey at her business and according to her availability. The advisor first helped Lainey understand what divorce meant for her finances and what her assets and liabilities look like now.

Regarding retirement, Lainey is nervous that she’s “behind.” Still, there are plenty of opportunities for her to catch up. The advisor helped her review her budget and find ways to make more tax-deferred elections toward retirement. In several years, when she turns 50, she can begin making catch-up contributions to her IRA. Lainey also felt better after seeing the various options for paying for college.

Lainey is relieved to have a plan that is mindful of her and her kids’ needs. She and her advisor scheduled a follow-up meeting to check in and see how the new budget and plan are going.

Pre-retirement Phase: Focus on Planning

The pre-retirement stage occurs during the years before retirement. Household expenses are stable, children are self-sufficient or are beginning to be self-sufficient, and the investor's savings rate is the highest. Investments will generally shift toward higher percentage allocations of lower-risk assets—like investment-grade bonds—with the objective of preserving wealth and creating income.

Goals for those in pre-retirement often include:

  • Taking vacations

  • Planning for retirement

  • Estate planning

Meet Pete

Pete is an empty nester and in pre-retirement. The countdown is on for him and his wife as they dream about their upcoming retirement. He has retirement accounts but wants a financial quarterback to help ensure their nest egg lasts through retirement.

Pete’s advisor walks him through a retirement readiness exercise. Together, they discuss Pete’s income sources and likely expenses in retirement. The math will help him as he and his advisor develop a retirement income plan, an insurance plan, a tax plan and an estate plan. Being prepared with a financial picture of retirement will help Pete determine retirement timing and how much he may want to leave to his children.

Now that they’ve set the game plan, Pete and his wife can focus on their retirement transition.

Retirement: Make Your Money Last

In the fourth stage of the financial life cycle, individuals may stop earning active income and depend on Social Security, investment earnings and savings. Assets may be invested conservatively—with a mix of dividend stocks and bonds—to seek to preserve the investor’s nest egg while allowing for growth and income.

Goals for those in retirement often include:

  • Achieving a desired lifestyle

  • Covering medical expenses

  • Estate planning

Meet Roger

Roger enjoys an active retirement with his wife. They live in Florida but love traveling and visiting family in the Northeast. Roger is a do-it-yourselfer when it comes to investments. Still, given the recent losses he's experienced in the turbulent market, he’s feeling unsettled that his nest egg won’t last. He wants an expert set of eyes as he navigates through retirement, trying to ensure that his money lasts.

Roger finds an advisor happy to help him revisit his financials. The advisor thinks Roger would greatly benefit from employing a retirement income strategy that adjusts spending—and withdrawals—when the market experiences losses.

Roger feels better that he’s adjusting to the challenging market. He’ll meet with the advisor again next year to check in.

Putting It Together

Did you find elements of yourself in any of these investors?

Early Erika needed guidance organizing her first wealth plan. Late Lainey received help with her new circumstances and kids’ college planning. Pre-retirement Pete has done a fine job building wealth but needed a game plan for when and how to retire. And Retired Roger is working on budgeting and withdrawal strategies to find a way to make his retirement savings last through a down market.

With a bit of help, all of these investors now have plans well-positioned to pursue the goals in their financial life cycle stages. Are your finances positioned for where you are—and where you want to go—on your journey?

Get Help From a Consultant

Our Investment Consultants are available to help guide you through retirement planning, now and when you make the transition.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

Diversification does not assure a profit nor does it protect against loss of principal.

You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.