As we get older, we will naturally experience changes and challenges in our lives. Across the different stages of life ages, we may have to make certain decisions. Let’s explore living through the different stages of life ages, typical phases in our lives and what you might need to consider from a financial perspective.
Key life stages
When it comes to age groups, the NHS has definitions on the human lifecycle. From Baby (0 – 1 year) to Toddler (1 – 3 years), Early childhood (4 – 12 years), Teenager (13 – 19 years) and Adulthood (after 19 years). In this article, we are focusing on adulthood, which we’ve split into three stages:
- Early adulthood (19 – 45 years)
- Middle adulthood (45 – 65 years)
- Late adulthood (65+ years)
It’s worth noting that common life patterns for each age group have changed over the years for various reasons. Therefore, the changes we used to expect to happen at certain ages are often now occurring later on in our lives.
Life patterns are changing
So, why are life patterns changing? According to the Office of National Statistics (ONS), this is likely to be due to the high cost of living and social factors. Previously, it was common for many people to leave home at age 18 to go to university. Many young people would also leave home by their early twenties and move into their own place.
Young people are becoming parents later, and many cannot afford to study or buy a home until they’re in their 30s. People are getting married later, and they are more likely to have children than be in a marriage. Women are giving birth later, fewer young people in employment, and there’s been an increase in older people working.
37% of men aged 18 – 34 years old were living with their parents in 2017, compared to 26% of women in the same age group.
(Office of National Statistics)
What happens during different life phases?
Despite changes in life patterns, let’s look at the three areas of adulthood more closely:
Early adulthood (19 – 45 years)
This life stage is usually when people get married, have children, and buy their first home. It can be a very challenging life phase, where families struggle to balance household bills with their everyday spend. Increasingly, many people in this age group have little savings.
If you do need to save towards a big future spend, such as a house deposit or a car, you could open an ISA. This offers a tax-free savings allowance of £20,000 a year. It’s also important to start contributing to a pension scheme as early on in life as possible. Over time, this will provide much-needed financial security for your later years. Also, consider different forms of protection, such as income, life and critical illness cover to safeguard your family.
Middle adulthood (45 – 65 years)
Previously, at this stage of their lives, many people would have paid off their mortgages, and their children would have left the family home. However, there is a rising number of people in this age group who are still repaying a mortgage. There’s also an increase of adult children still living at home, who need financial support until they are able to move out. Moreover, you may also need to contribute towards an adult child’s first house deposit or wedding costs.
Overall, this age group usually sees more people taking control over their finances, through learned experience and sensible savings strategies. Some people may have started to invest into stocks and shares with a small yet growing portfolio. It’s important to manage your wealth to prepare for the next stage of your life, where you will eventually retire.
Late adulthood (65+ years)
Typically, this is our retirement phase, so it’s important to make sure you are financially secure to stop employment. If you are a business owner, this could be when you choose to sell, either to a shareholder or to an external buyer. You might choose to pass your business down to your children, which will require professional advice.
At this stage, you’ll need enough money from your pensions, savings and investments to fund your later years. You might look to downsize or relocate from your main residence. It’s also important to factor in any potential health challenges and the cost of future care fees.
Important considerations for every stage of life
Below are some areas to monitor during every stage of adulthood:
- Do you have a valid Will with appointed guardians for children and up-to-date executors?
- Do you have adequate protection in place for you and your family?
- Have you updated the beneficiaries on your pensions and insurance policies?
- Do you have Lasting Powers of Attorney in place, and are you happy with your appointed attorneys?
- Have you had your estate valued and assessed for inheritance tax (IHT)?
Financial planner, Nottingham and Lincoln
As we move through life, our financial priorities change, and we will face emotionally and financially challenging scenarios. Some of these will be expected and others due to external factors. After all, few could have predicted the pandemic or the impact of the Ukraine-Russian conflict on household energy bills.
As your financial planner, we can help you prepare a sensible financial plan that will support you at every stage of your life. We consider every detail, which includes detailed cash-flow planning, so you can prepare for the unexpected. With offices in Nottingham and Lincoln, you can meet with us face to face or we can initially talk online via a Teams call.
Need a financial plan to support each stage of your life? Get in touch to speak to our financial planning team.