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Financial Planning for the 3 Stages of Retirement

Retirement Planning

One of the most common misconceptions about retirement is that “retirement is a single event.” Nothing could be further from the truth. Retirement, just like work-life, has various stages. Although retirement may be unique to each person, it generally passes through three stages or phases namely; active retirement stage, slow down retirement stage, and inactive retirement stage.

Understanding the different stages of retirement and taking away the assumption that retirement needs are the same throughout retirement can help you better plan for your retirement years. It is important to understand that each stage has its own expenses, and those expenses vary greatly depend on your activities, lifestyle and health.

Retirement isn’t a single phase or stage. It has different stages and learning, understanding, and adequately preparing for each stage is critical to your financial wellness throughout retirement. In order to help you better plan for retirement today, we're taking a look at the three different stages of retirement and how you can accomodate each stage into your overall retirement planning strategy. 

Active Retirement Stage

This stage occurs in the early years of retirement, usually between the ages of 60 and 75. At this stage, a retiree is still trying to figure out what to do with their newly found free time while enjoying the fruits of employment. Between this age bracket, retirees are still active health-wise and often find themselves looking forward to taking vacations and enjoying what life has to offer. As a result, the cost of living increases and more money is spent during these earlier years of retirement.

To have control in this stage of retirement, it is always a good idea to let your money continue to grow. Working with a financial planner during this stage can help advise you on the best investments to keep your money growing so that you can remain better prepared for the next two stages of retirement. Considering that this stage of retirement is quite exciting and full of adventure, it's important that you have the cash flow to sustain your budget. Plan accordingly before you retire and list the things you would like to try at this stage even before retiring.

Slow Down Retirement Stage

The slow down stage typically occurs between the ages of 75 and 85. In this stage, the retirement hype experienced in the first stage starts to fade away and you are more into taking-it-easy with life. Here you may find yourself spending most of your time visiting family and friends, and you may also start considering downsizing into a smaller home or moving closer to your grandkids and other family members.

Cash flow is equally important in this stage as it was in the active retirement stage. Although not most of it will be going towards travel and leisure, expenses related to healthcare costs may start to rise as you get older in age. At this stage, you still want your money to grow and therefore it's important to choose investments that won’t risk losing your money. 

Inactive Retirement Stage

This last stage occurs from the age of 85 and onwards. Here, your life will change in many different ways. At this stage maybe your energy levels are lower, and you may to call on your family for more help moving around or carrying out various personal activities. During this stage, you may see a reduction in your cost of living because you will not be moving around as often as the previous stages. However, on the other hand your healthcare costs may rise significantly.

During your earlier years of retirement, you need to plan for this stage well. It's important to have a plan in place about how you will want to be cared for in case your health makes you dependent on others. Inform your family about your savings and delegate authority to someone who can make important financial decisions for you in case your cognitive abilities begin to decline. In this stage, deeply focus on yourself and your general well-being in the final years of life.


  • This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice.  The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own.  Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors.  Faithful Steward Wealth Advisors can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.
  • Some information in this blog post is gleaned from third party sources, and while believed to be reliable, is not independently verified. The statements contained herein are based upon the opinions of Faithful Steward Wealth Advisors.
  • This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.