INVESTMENT ADVISER | ISSUE 09 2024 45
WHAT IS THE 4-LIFE FRAMEWORK ?
By dividing the retirement journey into four manageable building blocks , the 4-Life framework helps individuals prioritise and achieve their own specific retirement goals — and it helps financial professionals better frame what products and solutions can best serve the needs and aspirations of all retirees .
A full exploration to the framework is available here , including detailed examples of how each building block may be managed for different client personas . Below , we highlight a few client needs and investment implications within each category to consider as a starting point .
1 . LIFE EVENTS : CASH IS KING , BUT NOT FOREVER
• Client needs : Life events can include anything from weddings to births to health issues . Holding an easily accessible cash buffer reduces the stress of paying for these events . It also introduces the need for a longerterm plan to manage this cash . After all , holding cash provides comfort , but holding too much cash could mean a person ’ s savings do not last long enough — especially if that cash is earning a low rate of return in a bank account .
• Investment considerations : One way to think about the decision spectrum for how much cash to hold is the timeframe over which the cash is needed versus maintaining the real value of that cash for future purchasing power . Ultimately this becomes a tradeoff between market volatility , which could impact how much cash is available when needed , and inflation , which will erode its real value .
Source : Invesco