VIDEO: Understanding the Phases of Retirement Planning

VIDEO: Understanding the Phases of Retirement Planning

By Joe Dowdall, CFP®, RICP®, CRPC®, CCFC 

Retirement can seem like this vague event that’s too far off in the future to worry about. You can plan your retirement, save for retirement, and most people even spend their days dreaming about it, but we often don’t pay attention to the nuances of each stage of retirement. The journey to and through retirement occurs gradually, like successive chapters in a book, each with its own obstacles, celebrations, and decisions to be made. Watch this quick video to hear what you need to know for each stage of your retirement.

Transcript

Overview of the Four Phases of Retirement

Hi, my name is Joe Dowdall, and I’m a financial planner at Worth Asset Management in Dallas, Texas. I’ve been in this profession since 2010 and have had the privilege of helping hundreds of people navigate the pre-retirement and retirement process. Over the years, I’ve noticed that retirement typically unfolds in four distinct phases, and today, I’d like to explore each of them.

Phase 1: Pre-Retirement – Preparing for the Future

The first phase is pre-retirement, which refers to the time before you officially retire. For many people, this is when they begin focusing on what retirement will look like. They usually set a target retirement date, whether it’s a specific age like 65 or 70, or something more flexible. Once that date is set, it becomes easier to hone in on the financial and personal aspects of retirement.

During this time, I encourage my clients to start “practicing” retirement. This might mean trying out activities they’ve always wanted to pursue, such as traveling or volunteering. It’s also a good time to think about what their retirement income might look like and what lifestyle they envision. By testing out aspects of retirement ahead of time, you may even realize you want to retire earlier—or later—than originally planned.

Phase 2: Early Retirement – The “Go-Go Years”

The second phase is what I call the “go-go years,” which is the initial phase of retirement. This period typically starts when you’re at your healthiest and youngest, which gives you the energy to focus on checking off that bucket list of things you’ve always wanted to do. Whether it’s traveling, spending time with family, or pursuing a passion-driven job, this phase is all about enjoyment and experiencing life outside of work.

During these years, it’s also crucial to make important financial decisions, such as when to begin collecting Social Security. Retirees often wonder about where their income will come from, as they shift from earning wages to using their savings and investments. This is when decisions about how to withdraw money from accounts like IRAs, 401(k)s, or bank savings become key. The order in which you access these funds can impact your long-term financial health, so it’s something to carefully consider.

Phase 3: Middle Retirement – Slowing Down and Evaluating Health Needs

In the third phase, also known as middle retirement, many retirees begin to slow down. At this point, there are more decisions to make, especially regarding health care and taxes. You may need to start planning for Medicare, managing required minimum distributions (RMDs) from retirement accounts and reviewing your financial situation.

This phase is also when many retirees start to see the benefits of having worked through their bucket list. While there are still financial decisions to address, the pace of life tends to slow, and there’s more time to reflect on what matters most for the future.

Phase 4: Late Retirement – The “No-Go Years”

The final phase, often called the “no-go years,” is when retirement transitions into late retirement. This is when two key concerns tend to dominate the mindset of retirees: independence and legacy.

• Independence: In this phase, people often focus on how they want to age. The goal is to maintain control over their lives and make sure they can live independently for as long as possible. Many have planned for this by working with a financial planner to ensure their financial situation allows them to live the way they want to in their later years.
• Legacy: Retirement is also when individuals start thinking about the legacy they’ll leave behind. This could mean ensuring family members are financially supported or contributing to a favorite charity. It’s about determining how to pass on both wealth and values to future generations.

Navigating the Phases of Retirement with Professional Guidance

Each phase of retirement—pre-retirement, early retirement, middle retirement, and late retirement—comes with its own set of challenges and opportunities. It can be an exciting time, but proper planning is essential to navigate these transitions smoothly.

If you’re wondering how to manage your income, taxes, investments, estate planning, or insurance during any phase of retirement, it can be helpful to speak with someone who has experience in this area. I’ve helped countless people make informed decisions about their financial futures, and I’d be happy to assist you as well.

If you’d like to chat about how to prepare for the different phases of retirement, feel free to reach out to me at 469-423-1989. We can have a brief conversation to see how I can assist you in your retirement planning. Thank you for your time, and I hope you’re well-prepared to enjoy the exciting journey through these four phases of retirement.