Take Retirement in Phases

Some people imagine that retirement is a uniform event. However, you can break retirement down into four phases. You must plan psychologically and financially for each one. Begin early, before you retire. Organize your finances and decide how you will withdraw investment income. As you move into retirement, you may struggle with boredom or a lack of structure. However, almost anyone can have a successful and enjoyable retirement with proper planning.

Steps

Preparing in Your Final Working Years

1. Take care of your health. Many people are busy in the final few years of their working life. You may be wrapping up a busy career and also taking care of elderly relatives. It’s important to focus on your health.
   • Remember to eat well. Eat at least five portions of fruit or vegetables every day. Also remember to eat iron-rich foods, such as lean red meat.
   • Exercise is also vital. You won’t magically become active once you retire. Instead, you need to build an active lifestyle now, while you are still working. However, you should find exercise that doesn’t stress your joints too much. Consider swimming or bicycling over jogging.
2. Get organized financially. Soon, you’ll be living off your investments. However, do you know all of the accounts you have? For example, don’t forget Social Security benefits, old 401(k) accounts from previous employers, etc. You’ll need to sit down and get organized.
   • If you’ve lost track of retirement accounts, call old employers and ask if you had any account with them.
   • Also create a spreadsheet of accounts, PINs, and beneficiaries. People will need to know this information in case you become incapacitated at some point.
3. Reassess your retirement plan regularly. You should have begun financial planning for retirement when you were much younger. In your 60s, you need to regularly reassess your investments to make sure you have the right allocation mix.
   • Consider whether you want to merge accounts so that it is easier to withdraw income from them. Now is the time to rollover an IRA or your employer-sponsored retirement plan.
   • If you’re married, remember to come to an agreement with your spouse about investment priorities. It’s better to deal with these issues now than when you are retired.
4. Identify challenges for women. Women have slightly different retirement considerations than men. As a woman, you’ll need to consider the following:
   • How to get sufficient income in retirement. On average, women earn a third less than men, which means they usually have less saved.
   • How you’ll be taken care of in very-old age. Women live about two years longer than men. If your male partner is five years older than you, chances are he’ll die seven years before you do.
   • How being single in your later years will impact your taxes. As a single person, your tax burden will typically be higher.
   • How you will absorb higher medical costs. Women are more likely to suffer from a chronic or terminal illness, so you need to plan for those expenses.
5. Think about how you want to spend your retirement. Don’t wait until the day of your retirement party to come up with a list of things to do. Spend free time mapping out the first few years of your retirement. Do you want to travel? Improve your golf game? Go back to college to get that degree in English literature you’ve always wanted?
   • Come up with a list so that you can budget for these expenses. You might find that you don’t have the money to do everything that you want to do.

Enjoying Your Early Retirement Years

1. Begin withdrawing income. You need to turn your investments into an income stream during your retirement years. You have options. Meet with a financial planner to discuss how you can stretch your savings for as long as possible. Also, discuss how you much income you will need at each stage of your retirement.
   • One strategy is to simply withdraw money from your account whenever you need it. If you have sufficient savings, you can withdraw only income without touching the capital. However, you might not have saved enough, so you must draw down capital as well.
   • You can also withdraw amounts systematically. For example, you might withdraw four percent a year.
   • Discuss whether an annuity makes sense. For a lump sum, you buy a contract with an insurance company and receive monthly payments.
2. Avoid a spending spree. People are most active in the first few years of retirement. With all of this free time, you will be tempted to travel to all of those places you were too busy to visit. Accordingly, you might be tempted to blow most of your nest egg. Resist the temptation.
   • Remember that this is your retirement savings you spent some much time building. It isn’t lottery winnings.
   • Don’t deprive yourself. If you’ve always wanted to visit Paris, now is the time to do so while you are still healthy. However, mix in inexpensive hobbies (such as hiking or bicycling) with more expensive ones.
3. Work part-time. You might not want to give up work entirely. Instead, you could work part-time or in a consultancy role. You’ll still keep your mind sharp but enjoy the leisurely schedule.
   • Also try something new. The key to working in retirement is to find something that fits your schedule and is fun. If you’re dragging yourself to a part-time job, then you’re doing something wrong.
4. Structure your days. If you love all of the unstructured free time, great! However, many retirees find themselves at sea with all of this time on their hands. In fact, they might even feel guilty that they aren’t using their free time productively.
   • Create a mini work schedule. For example, schedule an hour for housework, an hour for errands, and then an hour for exercise. This routine provides enough structure so that you feel productive, but it also allows for plenty of free time.

Slowing Down in Your 70s and Early 80s

1. Manage depression and loneliness. After the honeymoon period, you may begin to feel depressed, lonely, or bored. Once you’ve done everything on your bucket list, you’ll start to settle down. Naturally, you might feel disappointed or sad.
   • Seek help. You can find a mental health professional by contacting your health insurer.
   • Make new friends. If all of your friends are still working, you’ll need to expand your social circle to meet new people who are also retired. Stop into your local retirement center or pursue hobbies like seminars and cooking classes.
2. Consider downsizing your lifestyle. In your 70s, you might want to move into a home with only one floor. You should think about selling your home and moving into a more manageable space.
   • Research whether a retirement community is right for you. Retirement communities come in different shapes and sizes. For example, some communities are for people who can live independently in their own apartments.
   • However, assisted living communities provide support, such as help with meals or housework, for those who can’t be fully independent but don’t need to go into a nursing home.
3. Plan financially for unexpected expenses. As you settle down, your expenses should become more predictable. However, unexpected expenses can still crop up. Because you might stop working even part-time during this phase, you need to carefully plan.
   • For example, you might need to pay for a major home repair if you still own your home. Fixing your roof can cost several thousand dollars.
   • Even if you have health insurance, you’ll still need to cover dental and vision care. Depending on where you live, you may also need to cover nursing home costs.
4. Construct a new identity. So much of who we are is tied up in our jobs and families. However, as you move into your 70s and 80s, you’ll probably stop all part-time work. Also, your family members are busy living their own lives. Accordingly, you’ll need to build a new identity.
   • You can volunteer one day a week or join other social activities. It’s important to meet new people who will view you in your new identity. If you were a former lawyer, you’ll be held back if you only socialize with those who knew you in your old job.
   • Also focus on just “being.” Practice mediation or yoga to gain a sense of self that isn’t tied to a job or other social role.
5. Review your estate plan. You need to put a final estate plan in place before you begin to slow down mentally. Accordingly, you should review your estate plan and revise it if necessary. Meet with an Select an Estate Planning Attorney.
   • Remember to rearrange your estate plan if you sell large assets. For example, you might have divided your assets equally between your children. If you sell your home, your estate plan is now unbalanced.
   • Also draft a living will and a durable Write a Medical Power of Attorney if you don’t already have them. With a living will, you spell out what kind of treatment you want in case you become incapacitated. Because you can’t anticipate all situations, you should also appoint an agent with a durable medical power of attorney. This agent makes decisions for you when you are no longer able to.

Winding Down in Your 80s and Beyond

1. Handle health issues. At this stage of retirement, you’ll begin to spend more time going to the doctor and managing your health problems. If you have a spouse or partner, you’ll need to manage their health problems as well.
   • You need to make informed medical decisions. Find a doctor who can explain things clearly to you.
2. Consider moving into an assisted living facility. If you are no longer able to meet your daily needs, you might need to move into an assisted living facility or a nursing home. Research facilities and pay particular attention to how you can pay. Some assisted living facilities, for example, accept Medicaid.
3. Find government assistance, if necessary. You might outlive your retirement savings or suffer serious setbacks. Now is the time to reach out for help. If your family can’t help you, then research what government assistance is available.
   • For example, many local governments have heat assistance that will help you in the winter.
   • You might also get meals through the Meals on Wheels program or through the federal Commodity Supplemental Food Program.
4. Stay active. With declining health, you might not be able to enjoy your regular activities—golf, tennis, travel. However, you can still stay physically and mentally active.
   • Get a scooter so that you can get around. There’s no reason to stay locked up in your house if you don’t have to.
   • Read the newspaper to stay in touch with the world. E-readers are great for the elderly because you can increase the text size of anything you are reading.
5. Prepare for your own death. It’s never too early to prepare. Spend a few minutes each day thinking about whether this is your last day. Then ask yourself if there’s anything you need to do or say. Make the time to cross off everything on your list.
   • Reflect on your life and everything you have learned. Keep a journal to record your thoughts. It will make a wonderful gift to your family when you are gone.

References

See also

• Make a Retirement Gift Basket
• Know How Much to Give for a Retirement Gift
• Make a Retirement Scrapbook
• Use Life Insurance in Your Retirement Planning
• Transfer Retirement Funds to a Roth Ira
• Start a Retirement Home in Ontario
• Retire from a Job You Love
• Prepare for Early Retirement
• Prepare for Retirement in Your 20s
• Plan for Long Term Care

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