The 6 stages of retirement – part 1

Stage 1, 2 and 3

January 11, 2018

In wealth management, we often discuss the evolution of an individual’s needs and goals. While some of this evolution is a natural part of aging or reflective of a growing career, portfolio and financial situation, other factors are specific to one’s life path. For example, a marriage or divorce. The birth of a child (or several). Taking on financial responsibilities relating to a parent or dependent child. The death of a breadwinning spouse or an unexpected inheritance. These are all circumstances that we see regularly in our clients’ lives, and are common reasons a person will review their needs, goals and lifestyle.

But what about retirement?

Retirement is sometimes viewed as a destination; the reward or end goal after years of hard work and careful planning. However, retirement is more than a single stage you arrive or remain in. It’s an evolving, personal process that is perhaps the most universal and yet surprisingly challenging life change. While everyone’s retirement journey is different, several clear commonalities have been identified. Gerontologist Robert Atchley’s model of the six stages of retirement is an interesting and often accurate representation of a typical adjustment to retirement. Today, we’ll review the first three stages – be sure to check back next week for the second part of this series!

Stage 1: Pre-Retirement

This stage is all about planning and vision. You may be focused on financial planning, or have a vision for how you’ll spend your days once the obligation of work has ended. Will you volunteer, or travel? Will you downsize your home or stay exactly where you are? What does leisure look like to you, and how much structure will you need in order to thrive? If you have a firm retirement date planned, you may find yourself easing out of work obligations, transitioning responsibilities to a successor or even disengaging as the time approaches. If you’re in this stage, my team can help you identify your needs and goals in order to make the most of your pre-retirement years (and set you up for the best possible stage 2, when you achieve the real deal).

Stage 2: Retirement

This may seem like the end of the road, but reaching retirement is only the beginning. According to Atchley, people in this early non-working stage fall into three distinct categories (or may cycle through two or three of them over a period of several months). You may have a honeymoon phase wherein leisure is the focus – essentially, approaching retirement like a vacation with a strong focus on social activities. Others may have an immediate retirement approach, wherein they begin a schedule that reflects their retirement vision: going to the gym, volunteering, spending time with grandchildren or doing whatever else offers them structure and enjoyment. Thirdly, they may take a rest and relaxation approach wherein they do as little as possible. These people may sleep in, lie around reading books or watching television, or generally appear to be doing nothing. In most cases, each of these approaches is a temporary phase that lasts six months or less. Think of it is a transition period as you settle into a new chapter.

Stage 3: Disenchantment

Once some time has gone by, many retirees see reality sink in. This isn’t a vacation – this is life. A reality check isn’t necessarily a bad thing, but it can be a shock to the system for some. What do you do with all this free time? What is the purpose of each day, and of this new life in general? Many will question their value and/or contribution to society after leaving the workforce. There may even be feelings of disappointment, letdown or anxiety that can come with change or uncertainty. This is normal, and generally subsides. During this stage, it’s important to reevaluate your goals and find a lifestyle that will work long-term in retirement. The honeymoon may be over, but the good times don’t have to be. You’ve worked hard to get to this stage of life – we want to see you enjoy it!

Next week on the blog, we’re covering the final three stages of retirement. As always, we are available to answer your questions and encourage you to reach out by phone or email if you’d like to discuss your personalized retirement plan or other wealth management needs.