One Simple Tip for Planning the Three Stages of Retirement

Three buckets have stacks of cash sticking out of them.

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published 14 December 2024

Planning for retirement takes decades of hard work. Ensuring you’ll have enough money to last the remainder of your life, creating a long-term health care plan, and knowing how and when to draw Social Security is a lot to juggle. Fortunately, you can take a more targeted approach once you understand the different phases of retirement.

Retirement can be structured into three different categories: the go-go, slow-go and no-go years. These terms are used to describe the various stages of aging and the typical energy, health and lifestyle changes that are associated with each. Therefore, your spending habits in each phase will also vary.

Go-go years

As the name states, the go-go years are often the most vibrant and active period of retirement. Retirees in this stage are usually in good health and have a sense of freedom they may not have experienced during their working years. Many choose to travel, pick up a new hobby, volunteer or even try a new sport. Retirees in their go-go years also have a thriving social life. This may include group outings with friends, community events and even reconnecting with friends.

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With your newfound freedom, the options are endless as long as you have the financial stability to support them. Therefore, planning for discretionary spending during your working years is key. To beef up your savings for this specific time, you can contribute more to your 401(k), open an IRA or take on more investments. You may also want to consider purchasing long-term care insurance. This can alleviate the financial burden of medical care you may need later on while freeing up more of your savings to use how you want.

Slow-go years

As retirees shift to their slow-go years, priorities become a bit different. Retirees in this phase are typically between 75 and 85 years old. This is a time when many people start slowing down physically, socially and maybe even mentally, because of increased health issues and energy levels. Instead of traveling the world, retirees in their slow-go years may opt for shorter day trips close to home, or increase the time they’re spending with family.

Retirees in this phase can expect less discretionary spending and more medical spending as doctor visits, medications and treatment increase. Medicare and Medicaid may be there to help offset the costs, but it’s important to rely on other income streams. This might be the time to utilize your long-term care insurance. Down sizing your home, moving in with other family members or even selling your car can help cut costs.

No-go years

The final phase of retirement is the no-go years. Retirees in their no-go years are typically 85 or older. For some, these years may bring substantial adjustments in living arrangements and support systems. Activities might become more home-based, focusing on comfort, relaxation and routine. Reading, watching TV, and small hobbies like knitting or crossword puzzles usually become the main source of education. Because of declining health, health care and long-term care costs are generally at their highest. Your estate plan is also the most important in this phase, so be sure that your plan is up to date.

Planning and saving for each phase

Planning for retirement is an experience many people dread, but your future self will thank you for it. Start figuring out your goals for retirement and create separate buckets of money for each phase. If you want to travel a lot in the first few years of retirement, start researching your trips and calculate the cost. If your family has a history of poor health, start looking into long-term care planning and talk with your family about how you’d like your care to be handled. This will help you start making a plan for covering those costs. Before retiring, or at the beginning of your retirement journey, consider meeting with a financial advis e r who can help you create a plan that works best for you.

Joel Russo is a registered representative of and conducts securities transactions through CoreCap Investment, LLC. NJ Retirement Planning and CoreCap Investments are separate and unaffiliated entities.

Investing involves risk and you may incur a profit or loss regardless of strategy selected. The information provided here is not investment, tax or ﬁnancial advice. You should consult with a licensed professional for advice concerning your speciﬁc situation.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Joel Russo is a New Jersey native and has been in the financial services industry for more than 35 years. He is dedicated to helping his clients reap the rewards of a well-planned retirement. Unlike many financial professionals, Joel specializes in the retirement market, "the over-50 crowd” and has dedicated his practice to educating this community with workshops on topics relating to income from the right sources, taxes in retirement, RMD pitfalls and legacy planning.