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Retirement Happens in Four Phases, and Each Requires Preparation

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Have you ever stopped to think that retirement happens in phases? Today we’re considering an article that suggests there are actually four phases of retirement, and each one demands a certain degree of preparation. The idea of phases of retirement makes sense to us, and we think it will resonate with you as well.

If you retire at, say, 65, and you’re in good health, the odds are good that you’ll live two more decades or more. That means the period of time called “retirement” can take you from an active lifestyle in your 60s to a period of physical frailty in your 80s and 90s, and everything in between.

This article on the Four Phases of Retirement comes to us from NextAvenue and was written by financial planner and speaker Hanna Horvath. We like the names she gives her four phases: Vacation, Loss, Experimentation, and Reward. Let’s dive deeper.

Phases of Retirement Bring Both Joy and Loss

At the beginning of her article, Horvath evokes the reason why retirement is frequently called the “golden years”, as it can be “an exciting new chapter filled with relaxation, travel, personal growth and spending time with loved ones.”

But, as she rightly adds, it can come with “its fair share of difficulties, including loss, boredom or lack of purpose,” too.

For her article, Horvath uses the four “phases” of retirement put forward by author and public speaker Riley Moynes, in his recent TED talk, as a basis for how Americans should prepare for this major life transition – not just physically and financially, but also emotionally.

Phase 1 of Retirement: The Vacation Phase

Horvath likens this first phase to the beginning of a romantic relationship, the famous “honeymoon phase.”

Horvath writes, “After decades of work, you can finally step back and enjoy some well-deserved freedom. This period may involve taking long-awaited trips, checking destinations off your bucket list, or enjoying new hobbies, interests, or sports without schedule restrictions.”

Rafael Rubio, president of Michigan-based Stable Retirement Planners, puts it this way: “It’s a euphoric celebratory feeling that kicks in as you no longer have a set schedule or routine, and you tend to do whatever you want, whenever you want.”

Rubio adds that this phase usually lasts a couple of years, and it’s vital to be aware of how you spend your money during this time. A budget is essential, not just to support you in having fun, but also in helping you be realistic about your long-term needs.

Liam Hunt, director at Sophisticated Investor, advises against making any major purchases until after you adapt to living on a fixed income. “Overspending in the early phases or withdrawing too much from retirement accounts are frequent financial pitfalls,” he says.

Phase 2 of Retirement: The Phase of Loss

One of the problems with a euphoric phase is that it ends, and sometimes leaves you feeling lower than before. Horvath calls this a “period of emotional loss” after the vacation phase and says it can often last a year or more.

This phase is typified by grieving the loss of professional purpose and identity, and it can also include a struggle with how to fill your now-abundant free time without the structure of work. Rubio notes that these feelings can come with a questioning of your own self-worth.  

“We are creatures of habit,” he says. “Once the emotional high of retiring has worn off and the vacation phase is over, many people feel a sense of disappointment. They’ve spent so much time looking forward to retirement, so once [disappointment] sets in, it can feel less exciting than it was hyped up to be.”

Our careers often carry an immense sense of accomplishment, a pride in who we are and what we do. After retirement, Horvath writes, “The void left can impact your confidence and self-esteem.” This adds to a feeling of emptiness and a sense that you lack purpose.

But Rubio encourages retirees to anticipate this transition ahead of time, to make it feel less jarring if and when it occurs. “You may be able to combat these feelings by working to reinvent yourself,” he says. This can happen in Phase 3.

Phase 3 of Retirement: The Experimentation Phase

This reinvention mentioned by Rubio comes into play in the third phase.

“After a period of loss,” Horvath explains, “retirees adapt to their new reality by entering an experimentation phase. This involves proactively trying new activities, routines, and lifestyles to find what gives you joy and purpose outside your career.”

Rubio agrees, adding, “Make yourself the CEO of your life and stay active in managing it. Create life and financial goals. Stay active and fit. Create a new schedule for yourself and keep your mind engaged with the day-to-day.”

Horvath includes the following list of suggestions in your experimenting:

*Testing out part-time jobs to stay engaged.

*Volunteering for causes you care about.

*Joining clubs or groups like a book club or golf league.

*Enrolling in classes to learn new skills.

*Traveling to new destinations.

*Moving closer to family or a preferred community.

*Picking up old hobbies.

Curiosity is key, as is keeping an open mind. It’s a win-win, according to Rubio: even if some things don’t stick, you’ll have expanded your horizons and tried something new. 

“Pay attention to which activities satisfy you and give you that sense of joy and accomplishment,” Horvath writes. “Devote more time to those winners.”

Phase 4 of Retirement: A Season of Reward

The final phase is the culmination of all that emotional work and trying new things: you finally get to enjoy your new routines.

“You may feel contentment that you’ve been able to adapt to retirement by figuring out your passions and priorities,” Horvath writes. “In this last phase of their lives, retirees can focus on staying healthy, spending time with family and enjoying moments with less pressure to achieve.”

Rubio adds, “Your life has structure again. Only this time, you control every aspect of your life. You have chosen activities that interest you, which makes it more meaningful.”

The only caveat, of course, is that the reward phase only works as a reward if you have the financial safety net prepared for it. Horvath explains, “As health care costs rise later in life, it’s important to have a plan to cover expenses not handled by Medicare. You may also want to use this time to support family members and leave a legacy through inheritance or philanthropy.”

Hunt adds, “Financially, this phase is about ensuring long-term security and the ability to enjoy the fruits of one’s labor. This might involve strategic withdrawals from retirement accounts, investing in experiences or contributions to family or community and ensuring adequate savings for health care needs.”

Though retirement has its unique challenges, Horvath encourages us to see retirement as an opportunity to be embraced, “a new chapter focused on fulfillment.”

Preparing for Every Phase of Retirement

Horvath concludes her article with her recommended steps to prepare yourself for each phase. Here, however, her true background as a financial planner comes to the forefront, since all her recommendations are about – you guessed it – money. We’ve shortened her suggestions considerably.

There’s nothing inherently wrong with her blueprint per se. She states that retirees should audit their spending to make sure their income will sustain their lifestyle choices. Retirees should also make a concerted effort to pay off debt, especially credit cards, car loans, and (she recommends) your mortgage. Horvath tells retirees to boost their savings and investment allocation for the appropriate balance of risk and reward.

She wraps up by urging readers to delay Social Security for all the obvious reasons. She admonishes us all to protect our health with the right combination of insurance and preventive care.  Finally, she touches on the advantages of working part-time for financial and social reasons.

These read to us like a laundry list tacked on the article. Instead of this approach, check out what Rajiv has to say about how true retirement planning deals with far more than money!

What’s more relevant, and what we came away with from this article, was the importance of emotional preparation for the phases of retirement. We need to get ourselves ready for the changes we’ll experience.

“Look at retirement as a blank page to write an exciting new chapter focused on your passions and purpose,” Horvath concludes. “It’s important to prepare ahead and stay proactive to make sure you have the financial means to fund each phase. The key is maintaining an adaptive mindset as your needs and priorities evolve throughout retirement.”

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

(originally reported at

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