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What Are the Phases of Retirement?


What Are the Phases of Retirement

Ah, retirement. While you may picture a life of leisure in retirement, did you know there are actually several phases to retirement? Understanding each of the phases of retirement can help you budget and plan accordingly. Here’s what you need to know about each phase of retirement.


Pre-retirement is the stage just before you retire. Typically, this happens between ages 50 and 62, but of course, it depends on when you actually retire.

While you aren’t quite retired at this phase, you’re starting to really think of what it will be like, how you will spend your time, and whether your 401 should be managed.  You are also making solid financial plans to determine the last few things you need to do before you declare you are retiring. At this stage, you may be meeting with attorneys and financial planners to get a solid understanding of what your future financial situation will look like.

Chances are, during pre-retirement, you are also starting to hand off responsibilities at work and transitioning some of your duties off to other people.

Pre-retirement is the ideal time to review all of your current monthly spendings and make any adjustments necessary. It’s also a good idea to focus on paying down any remaining debt you may have, such as car payments and mortgages.

Early Retirement

During early retirement, you are officially retired. Most commonly, people reach this phase of retirement at age 62 to 70.

Early retirement is a huge transitional phase. Your financial situation now looks totally different – you are relying on withdrawals from your retirement accounts and Social Security income instead of a steady paycheck from your employer. It’s also likely you will lose your health insurance through your employer, so you’ll have to research to see if you qualify for Medicare or Medicaid, or find private health insurance if you aren’t yet qualified.

Emotionally, early retirement is also an enormous (and sometimes difficult) transition. Since you are no longer working, you may feel like you lost your sense of purpose. And since you are no longer going to work, you have to create new structures for your days.

In early retirement, it’s a good idea to keep yourself busy by getting involved in the community. Certainly, it also helps to make sure you are spending plenty of time doing the things you dreamed of doing in retirement.

Middle Retirement

During middle retirement (between ages 70 and 80), you are likely feeling like you have this retirement thing figured out. You may find yourself tired of the activities you spent your early retirement doing, such as traveling or hobbies.

At this stage, it’s good to plan to nail down your finances and estate planning. Make sure that your will and estate plan are up-to-date and in order. It’s also a good idea to declare someone as financial and medical power of attorney in case you become unable to handle these decisions in the future.

Late Retirement

After about age 80, you are in what is considered the late retirement phase. At this point, it is likely you will be incurring significantly higher medical costs. Depending on your health, you may also need to look at additional resources, such as assisted living facilities. Your health dictates a majority of your spending during late retirement, so it never hurts to over save now.

Image source: 401kcalculator.org.

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