How Will You Write Your Retirement Story?

"Plan for the future because that is going to be where you spend the rest of your life." - Mark Twain. 

As shared in our recent communication, The Reality of Retirement - it may be beneficial to think of retirement in a four-phased concept instead of a single state.

The Four Phases of Retirement

Each phase of retirement is characterized by the tasks and issues individuals are most likely to be managing. The four retirement phases enable a clear vision to plan and to anticipate what is likely to come.

  1. The Honeymoon Phase
  2. The Big Decision Phase
  3. The Navigating Longevity Phase
  4. The Solo Journey Phase

1. The Honeymoon Phase

Many see the first retirement phase as the "honeymoon stage." It’s a time filled with grandchildren, travel, participation in leisure activities with perhaps a balance of part-time employment or volunteering to remain engaged. Among 65- to 74-year-olds, labor force participation is predicted to hit 33% by 2026.1

The Honeymoon Phase is characterized by resources and well-being comparable to life during full-time work. Responsibilities are shifted and additional healthy life years often allow for more freedom. It is also the opportune time to anticipate and safe-guard against potential decreases in resources in the future through planning.

2. The Big Decision Phase

While the second retirement phase is best characterized by more ‘free’ time, it is often unstated that it is a key time for making big decisions. It takes shape as work truly fades from view.

While one's health status may be less vibrant than before, the second retirement phase does provide a greater opportunity to make or renew social connections. Friends now have more time to socialize and even travel together. Work may be replaced by increased volunteering, grandparenting, travel plans or hobbies.

Where to Go?

Individuals and couples are confronted in the second retirement phase by tactical questions: “Now that we are fully ‘retired,’ should we buy a new car? Should we stay in our hometown or move somewhere warmer? Will life be easier if we downsize? Can we afford our current lifestyle for the long-term?”

As empty nesters face issues regarding changing housing needs, the option to downsize may be appealing. In fact, 42% of people say they plan to downsize in retirement.2

For many, concerns about the cost of home maintenance, proximity to family, access to services and livability of their existing home are reasons enough to leave the house, the town or even the state.
Changing Income Sources

Retirees in the second retirement phase are drawing a greater share of their income from different sources. Social Security-only (40%), a pension and Social Security (15%), and defined contribution and Social Security (15%) are the top three income sources. They are typically living on more of a fixed income.

3. The Navigating Longevity Phase

In the third retirement phase, the logistics of health management may become a full-time job with increased medical appointments, medication management and increasing mobility challenges. Spending per capita on healthcare increases steeply after age 65.

A Bitter Pill to Swallow

It’s estimated that 92% of aging adults over the age of 85 are managing at least one chronic condition and 77% are managing the complexities of two or more chronic conditions.3 Chronic conditions can make handling other health issues more complex and difficult to manage.

What may seem like a straightforward routine, medication adherence becomes a key and challenging aspect of managing health. A look at the numbers (see graphic) shows how increased age leads to juggling more medications.4

4. The Solo Journey Phase

In the fourth retirement phase, health or physical issues can quickly and abruptly come to the forefront. A single catastrophic event such as a fall or stroke can immediately change needs and lifestyle. Serious illness or disability of a spouse will greatly impact the well-being and safety of the household.

Health events or illness dictate the need for caregiver help on an occasional or daily basis to run errands, provide transportation or help with other activities of daily living (ADLs) and instrumental activities of daily living (IADLs).

It’s Important That You Write Your Retirement Story

The four phases reveal that retirement is big, complex and can be overwhelming. Understanding retirement not as one chapter, but rather as four phases in 8,000 days may help you write a realistic picture and make plans for the future. Effective preparation for the phases can reduce the stress of uncertainty and boost prolonged independence and control in life as you age.

At Covenant Wealth Strategies, we take a comprehensive financial planning approach to pursue your financial and lifestyle goals. Crafting a comprehensive financial plan involves understanding your unique financial objectives and designing a strategy that strives to build and preserve wealth over the course of your lifetime and events. 

If you have specific questions or would like to discuss your own retirement or financial planning needs, we welcome you to call us at 302.234.5655 or email us at to set up time to discuss further.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

MIT AgeLab, Hartford Funds and Covenant Wealth Strategies are not affiliates and make no representation to each other.

  1. Civilian labor force participation rate by age, sex, race, and ethnicity, US Bureau of Labor Statistics, 9/1/20
  2. Retirees Living Large by Going Small? TD Ameritrade, 2/2/18. Most recent data available used.
  3. Innovations in Nutrition Programs and Services, Administration for Community Living,9/21/20
  4. The Hidden Drug Epidemic Among Older People, The New York Times, 12/16/19.