The Three Phases of Retirement: How You Can Be Ready Financially


Does your financial plan cover the three phases of retirement? Once you have retired, it’s quite different from your career years. Now is the time to live off the fruits of your work and enjoy life on your own terms. You don’t want to leave your retirement lifestyle up to guesswork or chance. Your plan should make you confident that you will be able to retire well and then stay retired.

All of that said, retirement is a moving target, and it comes with distinct phases. These phases of retirement are:

  • The go-go years
  • The slow-go years
  • The no-go years

The go-go years are when retirees are in good health and able to do what they enjoy. That can be travel or physical activities such as pickleball or golf. The slow-go years are when retirees can still pursue those activities, but their level of involvement slows down a bit. Finally, the no-go years are when retirees have aged and their health has changed. They tend to need more long-term care support and other healthcare supports at this stage.

It’s hard to estimate how long each phase of retirement might last. That will depend on a retiree’s personal health, family history, history of taking care of himself or herself, and more. In this article, we will go over these three phases of retirement, what they might look like for how you spend your money and time, and things to keep in mind as you plan ahead.

Will You Have Enough Money for All Phases of Retirement?

While retirement evolves over time, it’s still a long journey to the proverbial finish line. You may wonder about how you can be confident about having enough income to last for all of that time.

One way to approach that question is by calculating how much you will spend in retirement. You can start by looking at your current expenses, which show what is financially important to you. Some of these expenses will stick around in retirement while others go away.

Here are a few examples. Your transportation and wardrobe expenses may shrink as you step away from a full-time career. Housing expenses are likely to remain, but that also depends on where you plan to live.

Other things may change. Will you be paying for college expenses for your kids or other loved ones? Do you plan to travel much? Will your lifestyle be very independent or very laidback? All of these questions are good to think about.

From there, break expenses into two categories: essential monthly expenses, and non-essential costs that are less frequent than your basic monthly spending.

Your essential spending will cover monthly living expenses: housing, grocery, utilities, insurance, transportation, and so on. The non-essential spending is tied to long-held life goals, such as travel, hobbies, entertainment, and charitable giving.

As time goes on, your retirement spending will likely change. Expenses for long-term care and healthcare often go up with aging. If you carry debt into retirement, paying it off can really add up in the no-go years. Inflation will also take a toll over time.

Planning for Lifelong Retirement Income

What else can you do beyond those steps for planning for lifelong income? Here are a few things to do.

Tally up your essential and non-essential expenses on a yearly basis. Run the numbers for at least a 30-year span, and have your spending go up by a certain percentage each year so you have inflation covered. You might aim for 2-3% per year as a cost of living adjustment.

When your spending increases and decreases will depend on your goals and personal situation. On the whole, however, the spending of many retirees over time might look like a valley trough or an inverted bell curve, if you were to graph it.

That is because retirement spending tends to be higher in the go-go years, go down in the slow-go years, and go up again in the no-go years due to increasing healthcare needs. A knowledgeable financial professional can help you work through these steps and see how you can plan for having enough money for a long-time retirement.

The Go-Go Years

Now, let’s get into the three phases of retirement. First, the go-go years. This period marks the initial phase of retirement.

Retirees generally have good health and a burst of energy. It’s when they want to follow through on goals and dreams that they may have put off during their working years. Traveling, volunteering, spending quality time with loved ones, and enjoying recreation like golf are common pursuits.

Financially, the go-go years may see an uptick in spending. It’s because retirees are spending money on things that matter to them at this point. Whether it’s exploring new places, taking up a hobby, or simply enjoying more leisure time, these experiences often come with a price tag.

Planning for these expenses before you retire is crucial. It will help ensure that you can keep up your lifestyle and not compromise your financial security in the long run. To that end, a well-built plan will have well-thought-out strategies for retirement savings, balancing the joys of today with the need for financial resources tomorrow.

You can think of it like riding the first hill of a roller coaster ride. It’s thrilling in the first leg of the ride, but you have to deal with twists and turns ahead, too. Your financial professional can help you navigate unique risks during this timespan, such as sequence of returns risk.

The Slow-Go Years

The second phase of retirement is the slow-go years. It’s typically when people’s physical and mental abilities start to slow a little.

Retirees can still enjoy what they were doing in their go-go years, but often at a slower pace. Their lifestyle slows down. Because of that, it’s a good point for retirees to assess their health and lifestyle changes. Then they can adapt their retirement spending (and saving) strategies accordingly. If you haven’t done so already, perhaps explore strategies that can help preserve your retirement funds so that money lasts for the long haul.

At this stage, you may spend more time at home, or your lifestyle may become less physically demanding. If you find your retirement becoming less active at this point and your plan hasn’t accounted for lesser spending as a result, take note. You may want to work with your financial professional to map out which expenses you need to cover, which ones will go away, and how you can be ready for these changes.

You might also want to think about the future and your potential changing health needs. Since our health situations tend to evolve with aging, your spending on healthcare will likely go up in later years from now. Getting financially prepared for those scenarios can make a big difference when they do arise.

Again, it’s about balancing the needs of the present with your long-term outlook.

The No-Go Years

The no-go years cover the final phase of retirement. At this point, people have moved into later retirement. Their health has changed, and as a result, physical limitations keep them from pursuing the activities they once enjoyed. Healthcare needs are typically greater.

Depending on someone’s situation, they may also need long-term care support if they are no longer able to take care of themselves. They might need home-based care, or they might live in an assisted retirement living community of some sort. Long-term care and healthcare spending tends to balloon in the no-go years due to these needs.

If someone has carried debt into retirement, paying the debt off can be really costly at this stage. That can really make their retirement savings dwindle if they are paying for health-related and debt expenses.

Income planning is crucial at this stage, as you might face a greater risk of running out of money. You might explore ways to pay for health and long-term care needs with financial products that can multiply your retirement dollars, paying multiples in benefits for each dollar you put into them. Some annuities, life insurance, and other insurance products can provide those benefits.

Long-term care insurance may also be help with high-cost long-term care services. If you do have debt loads at this stage, you could look at options that pay a steady income stream and dedicate them toward paying the debts off. Talk to an experienced and independent financial professional for more details.

Don’t Let Regret Drive Your Financial Decisions

Retirement is a moving target, and change can be intimidating. People may worry about overspending, which can to fear and stress of running out of money. It might keep them from enjoying activities or things they could afford. However, they don’t have to let this fear overtake their financial decisions in retirement.

Proactive planning can give you a roadmap to follow. As changes arise, you can adjust your plan and your spending levels. Your plan will also give you more wiggle room in how you respond to new issues that arise along the way.

As you move into the go-go years, be mindful of how your spending now can give you the lifestyle that you want. Balance that with how it might affect your finances in later years.

Depending on how your retirement assets perform, you may also have some flexibility. If your retirement assets have a good year, you might be able to spend more then. And if they have a bad year, you might pull back on your spending a bit for that year. Having some guaranteed sources of income in your plan, such as a pension or annuities, may give you more freedom to adjust your spending in these situations. They will pay you a steady base income stream regardless of what the market does.

Start Planning for Your Next Life Chapter

Whether you are in retirement or are 10 years out, there is no time like now to plan for your future. Are you looking for someone to help you walk through these different retirement phases and have a good plan in place? Do you have a set plan and want a second opinion on it?

Consider looking for an independent and knowledgeable financial professional who understands the very unique nuances of retirement and income planning. They should know the challenges and opportunities in this field of personal finance, and how to position you to have lasting financial peace of mind.

If you are ready for this personal guidance, check out our “Find a Financial Professional” section. Many experienced, retirement-knowledgeable financial professionals can be found there. You can connect with someone directly there and request an initial appointment to discuss your goals, concerns, and personal situation. If you would like a personal referral, please call us at 877.476.9723.

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