There are 3 distinct phases of retirement to plan for

Do you behave the same way you did 20 years ago? Are your spending habits the same? What about your saving behavior and income?

If the absurdity of those questions made you laugh, you’re like a lot of Americans whose financial habits have evolved over time. The same goes for your retirement years. Although you have probably calculated the value of your nest egg in terms of annual retirement income, what you will be spending immediately after leaving the working world will likely be very different as you move further into retirement.

The average retiree can expect three phases of retirement: early retirement – a period of travel, hobbies and adventure; middle retirement – a stage marked by socializing, activity and relaxation; and later retirement – a time of winding down, when most of your days are spent at home.

It’s logical to assume the costs of retirement will vary among phases. Spending habits at age 50 are definitely not the same as they were at 25. Likewise, your spending at age 85 will look different than age 65. Therefore, a retirement plan that includes specific “buckets” of money for each phase allows for more flexibility and helps ensure you won’t outlive your nest egg.

Let’s dig a little deeper into those stages and look at how costs can fluctuate:


Phase 1: Early retirement.

Your mind and body are sharp and you’re beyond excited to embark on new adventures. As a result, you may find this to be the most expensive phase of retirement. However, you’ll have to balance these increased costs to ensure you don’t blow through your savings in the first 10 years. Careful advance planning means you’re more likely to enjoy everything you want in your early retirement years while also safeguarding your future retirement income.

In this phase, be sure to adjust your budget for increased spending in these areas:

• travel
• hobbies (gardening, a new art class or membership at that golf course you have your eye on)
• grandchildren’s education costs
• assisting adult children in need

These higher expenses can be balanced against potentially lower costs in other categories, such as:

• reduced driving (car, gas and other transit expenses)
• less need for a professional wardrobe
• no more automatic contributions to your retirement accounts (which could be up to 15 percent of your income if you were on target with your savings rate)


Read more…

Credits: U.S. News & World Report

About the Author

How can you know what you should do if you don’t know what you can do? Author, radio personality, educator and financial planning pioneer Stephen Kelley shares his secrets to More Now, More Later™ retirement income planning. Most planners regard income planning as a “zero‐sum game,” a “Rob Peter to pay Paul” exercise. In these self‐serving, Wall Street‐dictated scenarios, people must limit the amount of income they receive to ensure they don’t run out of money in retirement. But there is an alternative to this “less now, more later,” or “more now, less later” mentality. Using state‐of‐the‐art income planning techniques, and his own trademarked “Last Things First™” planning process, Stephen Kelley blows the lid off the traditional Wall Street‐serving methods and brings retirement planning home to the individual retiree. In his books you will learn how to: - Unleash as much as 3 times the lifetime income using half the money with Kelley’s trademarked planning process, Last Things First™ - Ensure your Social Security benefits enhance, rather than impede, your plan. - Reduce, or even remove, taxes and fees from your retirement plan. - Maximize market returns while minimizing market risk. - Regain control of your pension so you not only get all the income you can, but so you can also leave it to your heirs. - Take control of the planning process so you can spend freely without worry. - Much, much more.

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