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Retirement Actually Has Four Distinct Phases – and Each One Demands Special Planning and Preparation

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When people use the word “retirement,” they often speak of it as if it were a singular event, one phase toward the end of a long and productive life. But these days, as Americans are living decades longer than they did a century ago, retirement can last for thirty years or more – and, as this recent Kiplinger article illustrates, those years can represent as many as four distinct phases. In the Kiplinger article, financial planner Tony Drake makes the important observation that planning for a successful retirement actually means preparing for each of these separate phases of retirement. Let’s take a look and see if Drake covers the important issues.

Retirement Changes Dramatically as We Age

Drake begins by asking us to paint our ideal picture of our retirement years. “Do you think of traveling the world or hosting a family game night with the grandkids?” he asks. “Are you picturing dinners at deluxe restaurants or around the kitchen table? “

He goes on to explain that while everyone’s retirement years can look vastly different from person to person, retirement is a decades-long process, and “most people have four distinct phases of retirement.” As the years pass, the way we approach our retirement will change. And as with most important life transitions, planning for those changes can go a long way to making sure that your retirement is everything you long for. 

Phase 1: Pre-retirement

“The first phase of retirement actually starts about a decade before you stop working,” Drake says. “While you should start saving for retirement on the first day of your first job, you’ll mostly be setting aside money and letting it grow. Once you are in your 50s, you enter the pre-retirement phase and should start actively planning for your retirement.”

According to Drake, goals are the best place to start. Dream a bit, then turn those dreams into actionable steps toward a vision of what you want your retirement to look like. “Talk it over with your spouse, if you’re married,” Drake adds. Starting with clear goals is the simplest, best way to make sure you have what you need in your savings.

“It sounds simple, but many people miss this step,” Drake says. “In fact, a recent survey from FinanceBuzz shows that more than one-third of Americans say they have ‘no idea’ how much they need to save for retirement.”

When do you know you’re ready for the next phase? Drake says that savings aren’t the only milestone, though they are essential. Instead, having a plan for income replacement is the most important step before you move into full retirement. “Since you’ll no longer be receiving a paycheck, you’ll need to replace your income in other ways, such as investments, Social Security, pensions or annuities,” Drake says.

He advises meeting with a financial adviser during this period to make sure that your plan is as airtight as it can possibly be. We would add that your adviser should prepare a financial dashboard for you as an essential planning tool.

Phase 2: The Early Years

The early years of retirement may be the most expensive, according to Drake, “because your mind and body are feeling good.”  During this phase you’re most likely to try new hobbies, use your free time to do the things you want to do, and spend a bit more than usual on eating at restaurants, travel, and other pleasures. As a result, Drake warns that “you’ll need to create a plan to make sure spending doesn’t get out of control. “

Most people imagine being done with their career in retirement, but Drake encourages retirees to consider a part-time job during this early phase. “Many people find it jarring to transition overnight from working full-time to not at all, and they enjoy doing something meaningful to pass the time.” The benefits of a part-time job can also include the ability to delay collecting Social Security or pulling from your retirement savings.

Lastly, this phase is also the right time to think carefully about the size and layout of your living space. “About 40% of retirees move after they stop working,” Drake says. “Some empty nesters downsize to a smaller home. Many retirees choose to move for other reasons, including being closer to family or enjoying a warmer climate.” 

Phase 3: Middle Retirement

After the relative tumult of the first two phases, making sure everything is planned and in place, Drake calls middle retirement—which usually falls about 10 years into your retirement—the “least expensive phase”, because you’ve probably settled into a rhythm in which you’re less likely to be traveling and trying as many new things. 

However—and it’s a big however – “health care expenses start to rise during this time as you start needing more medical appointments,” Drake warns. “You may also face additional medical expenses, including equipment and updates to your home to make it more accessible.”

This is also the phase where estate planning becomes most important. “If you created a will when your children were younger, you’ll want to revisit it to make sure it still reflects your wishes,” Drake advises. “It’s likely that your family dynamics have changed, with births, deaths, marriages or divorces. Once you hit middle retirement, keeping your estate plan up to date becomes more important than ever.”

Phase 4: The Later Years

By the later years of your retirement, the highest expense is going to be health care, so it’s best to plan for it now. “According to Fidelity, the average 65-year-old couple should plan to spend $300,000 on health care throughout their retirement,” says Drake. He adds, “Consider long-term care insurance in your earlier years, which will cover expenses like nursing homes, assisted living and home care services.”

Drake finishes his article by landing on what you’ve no doubt noticed by now: his advice is pertinent, but it’s all very financially-based (more on that from Rajiv, below).

He acknowledges that every phase of retirement should be treated as a different season, yet concludes, “A financial plan cannot be created and forgotten. Retirees should assess their situation often, consult with their financial adviser and make adjustments from pre-retirement through their later years.”

Rajiv: Kiplinger Article Misses Some Important Points

We asked Rajiv Nagaich for his take on this article. “This Kiplinger piece offers a refreshingly simple concept,” Rajiv responded. “The idea that retirement has multiple phases is an important one, and it puts LifePlanning in a proper context.” But in the end the Kiplinger advice is, in Rajiv’s view, incomplete. “In the final analysis,” he says, “the article reflects the pop culture idea that all of retirement – even the last phase – is 100 percent focused on money. That’s a dangerous misunderstanding!”

Throughout retirement, especially as we age, it’s vital that retirees take other issues into account besides money – legal, housing, medical, and family concerns. Otherwise, says Rajiv, we’ll end up running out of money and becoming a burden to those we love. “That’s why so many plans end in failure,” says Rajiv. “This article talks about planning for each phase of retirement. The truth is, of all the planning tools and philosophies out there, only LifePlanning fills in all those gaps that other plans fail to address.”

The bottom line: the article has an interesting premise, but some vital elements are missing. 

My Life, My Plan, My Way: Get Started on the Path to Retirement Success

At AgingOptions we believe the key to a secure retirement is the right retirement plan – yet statistics show that 70 percent of retirement plans fail. That’s why for nearly two decades we’ve been dedicated to the proposition that a carefully-crafted, fully comprehensive retirement plan is the best answer to virtually any contingency life may throw your way as you age.  Our slogan says it all: My Life, My Plan, My Way.

When it comes to retirement planning, most people focus on one fairly narrow issue: money. Financial planning is an important component of retirement planning. However, people heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. What about your medical coverage? What if you have to make a change in your housing status – will that knock your financial plan off course? Are you adequately prepared legally for the realities of retirement and estate planning? And is your family equipped to support your plans for the future as you age?

The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on!

(originally reported at

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