How to Plan for Your Three Acts of Retirement
Planning for your retirement years may seem daunting, but considering your differing needs and wants as you transition through these three phases can set you up for success.


As people live longer and a flood of Baby Boomers enter retirement, it’s time to rewrite our expectations for retirement.
For the average 65-year-old American couple, there’s close to a 50% chance at least one will live to age 94 and a 25% chance of one living to at least 98, according to the Social Security Administration.
Retirement is no longer a single block of time in your life-span. It is now three acts, an evolution of reassessed expectations and redefined goals. Longer life expectancies, and the health care costs that come with them, should be top of mind.

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Running out of money in retirement tops the list of concerns for clients. Nearly 73% of RBC Wealth Management clients surveyed said they worry about outliving their assets, while 62% said they were concerned about the cost of health care and long-term care.
Being too cautious and spending too little during your working years might needlessly restrict your lifestyle. But spending too much and not taking longevity into account increases your risks in retirement. Planning for the post-work years is a balancing act, but you can set yourself up for success by considering how you will spend your time and money during those three phases.
Act 1: Re-energizing (65 to 75)
Leaving a life focused around a career represents a major transition. While taking a break from the workaday world may be a relief, you may find yourself wanting to continue an active lifestyle.
Along with travel and renewed interest in a hobby, more Baby Boomers realize the importance of being involved during retirement, which could mean traveling, volunteering with charitable organizations or even taking on childcare duties with grandkids.
This means their spending is equal to or, in some instances, higher than what it was when they were working. Some decide to continue working on a reduced scale to keep busy or stretch their dollars in retirement. Before making that choice, consider the following.
Act 2: Downshifting (76 to 86)
Heading into your 70s, you will likely still be “on the go,” but it’s reasonable to expect the pace of life beginning to slow down.
At this phase, retirees are staying closer to home, starting to downsize their lifestyles and spending less — less on cars, less on homes, less on travel. They are leading a simpler and thus more inexpensive lifestyle.
Besides health care, housing is one of the most expensive pieces of the retirement puzzle. Not only is it a large expense, for many it represents a significant and often overlooked asset. To think about retirement without having a serious conversation about housing is a mistake.
Consider the following housing choices when developing your plan:
- Aging in place. You may need to update your home to make it safer and more senior-friendly, including remodeling bathrooms to make them more accessible or relocating the laundry room on the main floor.
- Downsizing. Will you move into a smaller condo or townhouse? Or move to a new town, either permanently or part time throughout the year? If you downsize, you can reduce the cost of upkeep, insurance and utility bills. You may also be able to profit significantly from selling your home.
- Continuing care retirement community. Healthy, younger retirees can live independently with social and recreational options. But if your needs change, the option of moving to an assisted living or full-time nursing section is available on the same property.
Act 3: Reflecting (86 and up)
As you reach your 80s and 90s, another major shift in focus often occurs: spending less money on activities like travel and hobbies and more on the essentials of life.
The challenge in these years isn’t normal monthly expenses — it’s planning for health care, including the possibility of moving to a retirement village or nursing home. Preparing in advance for this stage of life is critical.
Annual out-of-pocket health care expenses, on average, are nearly triple for an 85-year-old couple compared to a 65-year-old couple, according to a 2021 HealthView Services report.
While most don’t like to think about it, long-term care and its costs are no longer something we can ignore. Seventy percent of 65-year-olds will need some form of long-term care, according to the U.S. Department of Health and Human Services. The national annual median cost for a private room in a nursing home is $108,405, with the average length of stay at 2½ years.
Consider the following health and long-term care pieces as you set up your plan:
- Understand the impact of your income on your Medicare premiums
- Explore gap and supplemental health care coverage for costs not covered by Medicare, like dental and vision
- Consider getting long-term care insurance while you are healthy
- Ask to include health care expenses as a separate category in your plan and use a higher inflation rate to reflect health care inflation
For couples, having a survivor benefit plan is also important. Often the survivor will have greater care needs as they age without the support of the spouse.
Planning makes the difference
How confident are you that you're truly prepared for what retirement may throw your way?
The answer may lie in having a comprehensive wealth plan in place. Eighty-four percent of RBC Wealth Management clients surveyed who have a wealth plan are confident about retirement, while the same is true for only 45% of those without a plan.
It makes sense. Those who worked with a financial adviser and created a wealth plan have fewer concerns and generally are less likely to be blindsided by a change in direction that can easily occur over the course of a long retirement.
A solid retirement plan, created thoughtfully and managed over time, can help you prepare for unexpected changes in your life and give you the freedom to identify solutions to suit your lifestyle as your circumstances change in your three acts of retirement.
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Angie O’Leary is head of Wealth Planning at RBC Wealth Management–U.S. Angie and her wealth planning team are focused on helping clients live life with more clarity and confidence through goals-based planning delivered by skilled financial advisers. As a 30-year veteran of the financial services industry, Angie sits on several industry roundtable and advisory boards and is often asked to contribute her expertise. Angie has authored numerous white papers, published articles and is active in the media and press. She has a passion for financial literacy and is an advocate for women and their financial success.
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