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Financial Life Curve

Back on New Year’s Eve I went over to my Sister In Law’s house for Fondue. As we watched the numerous ball drop shows we came across one that caught my brother in law’s eye. It involved rappers from the ’80s performing their classic songs. Now I’m not much for rap, but I actually knew all of these songs from when I was in middle school. They used to play them at dances. Anyway as I listened, I noticed something. Most of the now old rappers could no longer perform. They were past their prime. The spectacle got me thinking, most things in life follow a growth and decline trajectory, is there a relatively standard Financial Life Curve?

The Beginning Stages of your Financial Life Curve

In the first few years of your Financial Life Curve, it’s all about growth. My father in law even said as much to me during our first discussion some 10 years ago. We were talking about careers and his statement was that my age in life afforded me the ability to adjust to increased expenses. What he meant is during your 20s and early 30s you start at the bottom of the financial salary curve. After that point for most people you see the most growth in income.

Raises typically are frequent, and when they do occur they are larger in proportion to your income. At the same time your income is low so if you set your expenses based on the income at this time, the longer you can hold that expense rate the better off you will be in the long run. Obviously this speaks to the concept of avoiding lifestyle inflation. Anything you invest here will have the most impact on your life due to the benefits of compounding. Stock investments will double every ten years so even small investments will grow into massive ones by the time you reach the end of your financial journey.

The Middle Stages of your Financial Life Curve

As you approach the 35 to 45 age group you enter a different stage of life, a stage of life I’m currently in. At this stage if you’ve maintained close to your original expenditure rate you’re doing pretty well. You might have a family, but at a minimum you’ve probably decided on a career and family direction by now. Expenditures are starting to creep up. If you have not been holding your expenditures in tight control you may have an issue. Your pay increases are probably tapering off, so keeping your expenditures down now shows more immediacy.

If you have been controlling your expenses you are likely at a point where you can take more risks. In my case I have a bunch of changes coming up for 2017. Under normal circumstances these changes might leave me with negative risk. That being said, because of what I’ve built to date there are very few scenarios which would truly cause me problems. As such I set my goals for 2017 as an aggressive baseline, and I still see potential upside depending on my decisions.

The final thing that may happen if you’ve kept expenses under control is your investments may begin to churn out bigger gains than your savings rate during this time. This stage brings options beyond simply doing whatever it can take to hustle to pay the bills.

The Later Pre-Traditional Retirement Stages

For the extremely well prepared few, retirement happens in the 35-45 range. For the rest of the folks, after 45 there are still some years left of employment. Traditionally in this stage of life you’re at the top end of your career trajectory. It is not uncommon for many people at this phase in life to adopt a work attitude of just passing the days to retirement. Even those who do not have that attitude are unlikely to see major increases simply because most jobs in a chosen field top out at about 15-20 years of experience.

At this point, expense control is a must. If you’ve not hit on a high savings rate from the beginning you’re going to need to dig yourself out of a big hole at this point. Without compounding it will really be hard to get ahead from here. For anyone that started from the beginning they will already be receiving more from their investments than their savings. It will be hard to catch up at this point which is why the top recommendation from financial advisers is to start investing early.

If you have been saving and controlling expenses diligently it’s very likely you will have the option to retire during this phase from 45-65.  Be aware your transition to the next phase may not be entirely your choice.  Health and retirement age rules can force you to retire at this point, so hopefully you are prepared.

Post Retirement Stage

For any type of retirement, either early or normal, after this point things begin to decline.   The rap stars we watched were great examples. Many had lost their voices or could not keep pace with their old songs. The same happens to you as you drift away from the work place.   Not executing at work daily will cause your skills in your chosen field to atrophy. You will develop new skills depending on your chosen retirement activities, but they will be different.

That being said, if you weren’t happy in your career you likely won’t be happy in retirement. Retirement doesn’t change who you are, it just changes your options for what you spend your time doing. Also for most people it only represents less then half of your Financial Life Curve. This is why its important to enjoy your path along the Financial Life Curve and find what you truly value. Because when you get to the end, what you really will have is the same thing you have in every prior stage. That is whatever you decide to pursue for value.

The Point of the Financial Life Curve

The lesson here is don’t retire early just to retire early and don’t rush life. Find what you value in life, and pursue it through all phases. Retire only when you’re ready and only when it gives you another option you value. Coming back to your old working life 5-25 years later will likely not be possible. Other doors may open due to your non working hobbies, but they may not be as good as the one you left behind.

If you foresee any possibility of a need to return, choose a retirement hobby or activity that you may be able to later leverage if need be. There’s nothing worse then being the 55 year old retired rapper trying to relive your glory days with those in their 20s when you no longer have a voice.

Which stage of the Financial Life Curve are you in?


  1. Leo T. Ly
    Leo T. Ly May 10, 2017

    I am currently in the 35-45 camp. If I am financially ready now, I will choose to pursue my passion/hobby instead of continually working to pay the bills. To avoid the case of being an outdated rapper, I have a net worth number in my mind ($2M) that will allow me to be financially freed to follow my passion and hobby. Of course, I wouldn’t spend half of my net worth to pursue my passion. That money should allow me to retire relatively comfortably as I am not a huge spender.

    • May 10, 2017

      Leo, It sounds like your in a good position for your age cohort and have a flexible plan going forward.

  2. I’m in the 25-35 gap. I’m looking to accumulate assets now so that when I turn 35, I will be in a great situation for my future wife and kids. I’m up for promotion, so hopefully that is a good sign. I’m also starting a business to try to accumulate wealth independent of my current work. 2017 is a year of yes, a year of trying things, and a year of going all out. In the next 3-5 years, I’m going to do some great things 🙂

    • May 10, 2017

      It definitely sounds like your in the accumulation phase and headed up significantly in salary. I look forward to hearing how it works out with your business plans.

  3. Kevin Drevik
    Kevin Drevik May 10, 2017

    I’m at 53 years old, and on the downward career curve. You have a valid point about enjoying your career, so that you can enjoy your post-career. For the most part, I enjoy what I do, its just the boss and peers around that can cause issues (though they can also make work enjoyable with the peer group). I’m close to financial independence, but unsure if I’ll “retire” at that point. I will probably take a sabbatical for a year, and then look to get back into something less stressful/more enjoyable.

    • May 10, 2017

      A sabbatical is a great approach. I expect we’ll take one or 2 two month sabbaticals before retirement to travel for a month or two. You are so right that peers and boss make or break the job.

  4. Matt Kuhn
    Matt Kuhn May 10, 2017

    I’m in the beginning stages of the financial curve (25-35). Watching out for lifestyle inflation is definitely something I have to keep reminding myself and my wife. My goal is to reach financial independence by 45 (it’d be sooner, but I plan on having several kids), so I’m definitely trying to hustle now to make my situation better off in 20+ years. Thanks for the post – it’s good to take a step back and look at the big financial picture.

    • May 10, 2017

      45 is very doable, though kids do make things interesting. Hustling prior to kids is a lot easier, which is one of the reasons salary grows so much in that first stage. That and there is a lot of room for growth. Thanks for the comment.

  5. Erith
    Erith May 10, 2017

    I’m on the post Retirement curve, and really enjoying it. Enough money to travel, indulge my hobbies and generally do what I want. My husband, equally happily retired from full time work, has chosen to keep the work-door open. He works part-time, in his own time, just does the work he wants to do, no admin!. However by working just on his terms, he is really loving it. He has enough flexibility that if we want to go away for a month, that is no problem. Everybody wins

    • May 10, 2017

      Erith, It sounds like your husband has a great situation. I’m hoping to move more and more that direction as time passes.

  6. Mustard Seed Money
    Mustard Seed Money May 10, 2017

    I’m currently in the middle stages of the curve on my way down. I have everything set up at this point and I’m financially set up at this point. I just need to continue on the path and make sure there aren’t any blow ups along the way to keep things going 🙂

    • May 11, 2017

      It does get to the point where it runs itself at a certain point, doesn’t it? Kind of like a car on cruise control on a straight highway. At some point your making only minor corrections, but when you first entered the highway it was significant.

  7. Mr. Need2save
    Mr. Need2save May 10, 2017

    Both Mrs. Need2Save and I turn 45 later this year, so we are closing out the middle stage. Our incomes have really increased nicely over the last decade, but they raises will likely taper off a bit as we reach ‘saturation’ in our current positions. Although I’ve mostly enjoyed the work I’ve been doing for the last 22 years or so, I am looking forward to exploring areas that I’m interested in… without needing to worry about the associated income.

    • May 11, 2017

      Any thoughts to what those new areas will be?

  8. Grant
    Grant May 11, 2017

    Thanks for writing this. I am 30 and sometimes the thought of working 15-20 more years gets me a little down. Maybe I can play it right and get out by 40 but either way I can’t wait till I retire to be happy and pursue the things I love.

    I will enjoy the climb and watch out for lifestyle creep.

    • May 11, 2017

      All it takes is focus and consistency. Set the goal and adjust to reach the objective.

  9. The Magic Bean Counter
    The Magic Bean Counter May 11, 2017

    I’m in the same stage as you. Its definitely important to have a good plan in place before choosing to pursue early retirement. Luckily planning things out is what those in this community are best at! Nice post

    • May 11, 2017

      The community is definitely a great resource in the path.

  10. Work Life Moolah
    Work Life Moolah May 12, 2017

    Definitely need to enjoy the journey. I’m in the late career stage and in between roles. Need to work a few more years but able to be patient because I can. Really trying to smell the roses before I round third plate.

    • May 12, 2017

      One of the many benefits of being later in the curve. How are you utilizing the break?

  11. Live Free MD
    Live Free MD May 13, 2017

    Based upon my age, I’m in stage 2, but functionally, I’m in stage 1 (accumulation phase). Most who enter medicine play a game of catch up for the first 5-10 years after residency. I plan to hustle for the next 3-5 years or so and then gradually transition towards a more sustainable and relaxing pace, gradually finding more and more time for other passions, including family, athletics, real estate investing, teaching, writing, and speaking.

    • May 14, 2017

      Great point. There are definitely professions that delay significantly the start of phase 1. Thankfully many, but not all, compensate well enough to make up for the delay. Take advantage by continuing to live like a resident after the paychecks come in and you’ll quickly catch-up.

  12. Budget on a Stick
    Budget on a Stick May 15, 2017

    We are still in the beginning stages of our financial life curve. Trying to get everything in the best shape to make sure we are in the best position for what’s to come

    • May 17, 2017

      Laying the foundation is the important part, it gets easier in the later stages if you do it right early on.

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