It’s easy to think of retirement as one thing, one phase of life that we all aspire to experience. And why not? After all, retirement is such a stark contrast to the preceding decades-long phase that’s built around paid work. But what if retirement is made up of many different smaller phases, distinct from one another in activity level and even spending habits? Can that help us in our retirement planning, both emotionally and financially?
You may have heard me discuss three phases of retirement before. It’s so helpful to many of the families we work with that I wanted to go a bit deeper into each of the phases. Three phases of a typical retirement can be thought about in these not-so-technical terms: Go-Go, Slow-Go, and No-Go. Let’s look at each of these to see what we can learn about ourselves and the planning that best supports each phase:
In this first phase of retirement, it’s pedal to the metal. All of those dreams of travel, golf, and going to grandkids’ events finally become reality. It’s in this phase that retirees tend to be most active while good health and time freedom from having a job come together to form the ideal: life lived on your terms. This is what most people think about when they consider their future retirement. Retired life in the go-go phase is good, very good.
At this point, you’re just not bouncing out of bed each morning like you once did. Many of the bucket list items have been checked off and thoughts of circling the globe just don’t hold the same appeal. You’ve done many of the things you wanted to do and now you’re finding more contentment in slower activities and staying a bit closer to home. Life is still good; it’s just a bit slower now.
Sadly, declining health means a more sedentary lifestyle sets in for most, and one spouse may have passed away around this time. Big vacations just aren’t in the cards now, and it’s much easier for family and friends to come by the house than it is to go out and see them. Life can still be good, it’s just lived in a smaller travel radius, if traveling at all. The no-go phase is often marked by care needs and sometimes involves a care facility.
Intuitively, you know these phases of retirement because you’ve seen them experienced by family members and friends. Each person lives these stages at different ages and at different speeds. Inevitably though, we all must reckon with how we’ll plan for and adapt to each phase.
As a result of these phases and the natural course of a life, financial planning needs must adapt for each phase. Typically, the go-go phase results in the highest spending years of retirement, at least for most. Trips and hobbies can be costly but it’s better to do these things while you still have the vitality to do so. The slow-go phase is often still active but most retirees do curtail their spending quite a bit during this time. Again, those big trips have been taken, and it’s natural to see smaller expenses incurred.
The no-go phase can either be a very low expense phase of life or very high, depending on health. This is the least predictable phase. I hope to pass away peacefully in my sleep at an old, but otherwise the ‘still sharp as a tack’ guy. Ideally, this is in my own home. That would result in very little expense for my family. On the other hand, I may find myself in a long term care facility that requires significant amounts of assets to be paid for my care. Financially, this isn’t ideal, so planning for the possibilities is very important.
As you consider the phases of retirement, I’d encourage two distinct responses: 1. Plan your finances mindfully, to best support you in these phases, and 2. Enjoy each and every day as much as possible because our stories all end very similarly.
Strangely, after writing this, I’m tempted to eat some extra dessert today. Because…why not?
All the best,
Adam Cufr, RICP®