Saving for the 3 Stages of Retirement

Planning Ahead

How much money do you need to retire? This is a question that we hear frequently. It seems that there is no one simple answer. There are three stages of retirement, all of which require different amounts of money according to our goals, lifestyle, and what is on our bucket list.

The first stage of retirement are the go-go years where people will travel and remain active while they are still healthy and have the zest and drive to participate in numerous activities and passions. These are the most expensive years. They last until you reach age 75, depending on general health.

Second are the slow-go years where retirees are still active but are slowing down and doing less. Predictable daily and weekly patterns emerge such as shopping and socializing which provide comfort and security. Some expenses are based on medical and housing issues during this phase of retirement. This era stretches from approximately age 75 to 85.

Third are the no-go years which start in the mid 80s and last for the rest of your life. Activities and abilities may have slowed down considerably, and this is a time when medical costs can take a significant bite of your income and savings. Additionally, this may be a time for long term care.

The difficult question is how much money you need for each of these three phases, and whether your goal is to run out of money at the end or your life, or to leave substantial sums to your heirs. Financial planners suggest that one size clearly does not fit all.

The key to retirement planning is to recognize that not all retirement is the same not just with regards to lifestyle but also to spending. It’s important to know where you are in life today and look ahead into the future to recognize plans for that future especially through the different phases of retirement. Planning ahead can make a huge difference.