When do you stop saving/investing?

capital0ne

At what point in your investment/saving cycle do you stop - okay one answer is when you die, but some time before that, when is it?

Eco_Miser

Stop adding to your investments when you run out of spare money.
Never stop holding investments.

There could be tax-planning reasons to stop investing, and start giving your money away, or you think you've got more than enough for the rest of your life, and a charity or your family could make better use of the excess.

Broken_Biscuits

When you have enough?

darkidoe

In personal finance, we talk about the Accumulation phase and the Decumulation phase.

The accumulation phase is when you are in the wealth building phase, where are accumulating income generating assets and investing more heavily. This is typically when people are young and physically healthier and income generating potential is more stable. Investing horizon is long (>10-20 years) hence significant risks can be taken to ride out the volatility of markets. Key concept here is dividend reinvestment to compound the effects of accumulation over time.

The decumulation phase is when you decided you have reached a level of wealth that can maintain a certain standard of living lasting the rest of your lifetime. This is stage is more about wealth preservation and generating a steady income to maintain that standard of living without taking unnecessary risks. The most straight forward arbitary example would be at retirement age (65). People tend live longer nowadays, and if we have say an average life expectancy of 80++, you may be looking at potentially 25+ years length of drawdown, which is still a fairly long time horizon, hence having some proportion of your wealth in investments might still be a good idea.

But say if you have a definitive terminal diagnosis with a prognosis of a few years, then maybe perhaps saving and investing for 20-30 years might not be your goal.

Have a few goals and reassess them regularly. It is all quite personal and a lot about risk management.

bostonerimus

darkidoe wrote: »

The decumulation phase is when you decided you have reached a level of wealth that can maintain a certain standard of living lasting the rest of your lifetime. This is stage is more about wealth preservation and generating a steady income to maintain that standard of living without taking unnecessary risks.

With the replacement of final salary pensions by defined contribution plans and the amazingly bad value of annuities the tricky things with the retirement spending phase are now the necessary risks you have to take to generate income.