The Four Stages (Quarters) in Life

“Why Each Stage Has Different Financial & Legal Needs”

As we walk through life from Birth to Death, we go through four distinct phases of life, each with its own legal and financial needs. Below is a brief synopsis of each of these stages.


1st Stage or Quarter in Life

The Learning Stage (Age 1-18/22)

Financial Needs: To be taken care of

Legal Needs: No will, living will, power of attorney needed (until child is of majority age).

Reason: Parents are usually in charge of their life at this stage. However, when they reach 18, this may change. The parent or guardian will make the most of the decisions for the child on legal matters (the law will still protect the child from neglect or abuse).


2nd Stage or Quarter in Life

The Debt Stage

(Dependent on the following events:  Graduate School, Marriage, House, Children, New Career)

Financial Needs: Make as much as possible and pay down debt: Lots of term insurance. It would be good to start saving ($10-$50 per week).

Reason: Obviously, High Debt. The term insurance is a cheap way to take care of the spouse and minor children should something happen to the major bread winner. Saving even a modest amount each week is a good way to learn the habit of saving and growing wealth.

Legal Needs: A will or living trust.

Reason: To take care of minor children and spouse.


3rd Stage or Quarter in Life

The Savings Stage

(Dependent on the following events rather than age:  Low Debt & High Earning Power)

Financial Needs: Make, save and invest as much as possible.

Reason: Saving for retirement when earning power is highest and debt is lowest or non-existent. Hopefully the house is paid for and the children are out of college and married. This gives most people the opportunity to save large chunks of money toward retirement.

Legal Needs: A will or living trust.

Reason: Distribute property in case of early death and to take care of spouse. (Remember that the Rule of 72 applies here).


4th Stage or Quarter in Life

The Retirement & Legacy Stage

(Dependent on the following events:  Not making anymore income (or very little), Living on what you have, Have a desire to leave a legacy to children, grandchildren and possibly great-grandchildren)

This is the stage where everything financial becomes legal and everything legal becomes financial.

Financial Needs: Preserve what you have.

Reason: Since there is very little additional money coming in, the main need is to stretch the money for the rest of your life (which will probably be 10 years longer than you think).

Legal Needs: Will, living will, power of attorney for finances, power of attorney for health care, possible living trust, possible irrevocable trust.

Reason: Preparing for possible incapacitation and death while taking care of  your spouse. Also, you are preparing to leave a legacy to your heirs. (Remember that the Rule of 100 applies in this stage.)