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The Two Phases Of Retirement


Planning for their retirement is a very important thing one needs to take care of,  and almost everyone knows about it. But not many people are aware that retirement has two phases, Accumulation phase and a Distribution phase.

It is really necessary for us to understand these two phases because each phase is different and has its own goals. So let us discuss them in detail today and make the process of retirement planning easier for you.

Accumulation Phase

It is also called the pre­retirement phase this is the time before you are about the retire. As the term suggest, the accumulation Phase when you are still working and earning money to accumulate it for your retirement phase.

Accumulation face is a very important stage of retirement because this is when you require to strategically plan and allocate your funds into relevant assets to reap the benefit in future. You should try to build multiple streams of income during the period of your life.

As you move towards ending of accumulation phase you should shift your funds to a safer and risk free assets. You might require help of an expert financial planner to build such strategies.

As no one really knows the exact amount of money one would require for their retirement,  we really need to have a strong plan to guide us through and make sure we do not fall short of funds in the crucial stage of life.

Distribution Phase

This is the time when your actually retire and start using the money your have been accumulating  all  you working life. Your are not working and generating any active income and are totally dependent of the funds you built in your previous phase.

Although in the distribution phase you are not accumulating any assets, but still you need to continue planning and creating strategies because the value of your portfolio is never constant, you need to reallocate your funds according to the situation.

As no one can exactly predict their total lifespan it really gets hard to plan and make your funds last long as well as not cut down on necessary expenses. You also need to make sure that on your distribution phase of retirement you keep all your funds in the safest assets possible, As this is really no the time for you to take any risk.


Planning our finances is important before the retirement and even after the retirement. Building a pool of funds during your accumulation phase and then managing it wisely in the  distribution phase will ensure your funds will last longer and you will be able to live a comfortable retirement life.

IF you have any ideas or comments to share please post them in the comment box below.

Moiz Choolawala
Moiz Choolawala
Moiz Choolawala is the founder of Plansmart and a SEBI Registered Investment Adviser. An MBA in Finance and Marketing Moiz is an experienced investment adviser and blogs about investments, personal finance, insurance planning and tax planning.

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