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February 17, 2009

Maximizing The Accumulation Phase of Retirement


Accumulation Phase

The amounts added during the accumulation phase are typically earmarked to help finance one’s retirement years.
nest egg accumulation phase

What is the Maximizing The Accumulation Phase of Retirement?

The period during which an individual adds to his/her nest egg.

The amounts added during the accumulation phase are typically earmarked to help finance one’s retirement years.

The term is also used to refer to the period during which amounts are added to annuity contracts.

Additional Helpful Information About The Accumulation Phase

Individuals should work with a financial planner to ensure that the amounts added to their nest eggs during the accumulation phase are consistent with their financial goals & objectives and suit their financial profiles. This includes ensuring that the following factors are taken into consideration.

    • The amounts are added to accounts that are geared towards the individual’s financial needs. For instance, if the individual is the primary breadwinner in the family, should some of those funds be used to purchase insurance that can be used for replacement income in the event of the individual’s death or disability?
    • The amounts added are treated as one would treat a recurring expense so that it is added to the nest-egg frequently instead of being treated as part of the individual’s disposable income.
    • The amounts added are affordable. It would be impractical to add amounts to one’s nest egg, only to have to use credit cards and other debts to finance everyday expenses.
    • Consideration should be given as to whether it is more financially astute to pay off high-interest debts than to add to one’s nest egg.

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