What Are the Five Stages of Retirement?

Aged couple enjoying each other stock photo
Zinkevych / iStock.com

Some people start thinking about retirement soon after beginning their first full-time job, and it’s certainly never too early to begin planning for it.

Understanding the five stages of retirement can help you know what to expect and determine where you are in your journey. Here’s a deeper dive into what each stage of your golden years entails:

Stage 1: Pre-Retirement

Pre-retirement typically starts 10 to 15 years from the time you plan to retire, although it can start any time you begin investing in your future. You should review your retirement accounts such as IRAs, 401(k), 402(b), stocks, bonds and other investments. If you haven’t begun investing for retirement, it’s never too late to start. Start by paying down debt. Look at your budget and see where you can cut any expenses to set aside even a few hundred dollars per month into a retirement account. Any funds you can save will help supplement Social Security income in your later years.

With that in mind, it’s also important to research your Social Security options. Will you choose to wait until you reach full retirement age to claim Social Security?

As your retirement approaches, you’ll also want to evaluate your Medicare costs and options. The Fidelity Retiree Health Care Cost Estimate found that a 65-year-old couple will need $315,000 saved in 2022 to cover their retirement health care costs. If you retire before age 65, which is when you qualify for Medicare, you’ll need to explore other health insurance options, too.

Stage 2: The Honeymoon Phase

Just as marriage has a honeymoon period where everything should be going smoothly, so does retirement. When you first retire, you should be happy about your newfound freedom. However, with extra time on their hands, many people begin overspending on hobbies and travel. It’s important to be mindful of your budget and make adjustments now so that you don’t run out of money later.

Are You Retirement Ready?

Stage 3: Early Retirement

Depending on when you retire, early retirement can begin around 70, or even sooner if you retire before the average retirement age in the U.S., which is 65 for men and 62 for women, according to Forbes. In early retirement, you may continue making adjustments to your budget and lifestyle. You may move to a smaller home or even sell your house to move to a retirement community where the home requires less upkeep.

At this point, experts say, it’s normal to feel bored or even depressed as the daily life of a retiree sinks in. If this happens, try to find a sense of purpose through hobbies you are passionate about, volunteering in your community or even a part-time job. Maintaining social contacts is very important.

Stage 4: Mid-Retirement

By mid-retirement, sometime in your early 70s, you should begin to feel as if you’ve got things figured out — financially and emotionally. If you’ve prepared well, you should be enjoying hobbies and travel while experiencing financial security.

However, if you don’t have long-term plans in mind for that time when you begin to slow down physically, you’ll want to start thinking about how you might pay for assisted living or nursing care.

Stage 5: Late Retirement

Late retirement may come at different ages, depending on your physical health. This marks the time when you are less active and may even need long-term care.

While this may be a difficult topic to consider, make sure to discuss your end-of-life wishes with your family, including what life insurance you have, who should have power of attorney (if necessary) and who is named in your will.

Are You Retirement Ready?

Hopefully, you will have many years of mid-retirement and a stress-free late retirement to enjoy your family, friends and the legacy you’ve created through the years.

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