The Six Stages of Retirement
By Scott Gese

Some experts say there are five stages, but many believe it should actually be the six stages of retirement and that there is an additional stage. One called the anticipation stage. This is an important stage when people start thinking about what they want to do with their retirement, and plan accordingly.

Retirement is a time in life everyone reaches at some point. Some people plan for it, while others just show up. Those who plan tend to have an easier time adjusting to the changes and moving through the stages of retirement. On the other hand, those who don't plan may struggle more.

To understand the different stages, let's take a look at two fictional characters, Leo and Bill. Leo is a planner, while Bill likes to fly by the seat of his pants.

Stage One: Pre-Retirement.

This is the longest and most important stage. Most of what you do during this stage will determine the type of retirement lifestyle you will end up with.

In this stage, it's important to:

• Find a good job with a retirement plan.
• Start a retirement savings/investment account.
• Formulate ideas about what you want to have/do when you retire.
• Find a good financial advisor.

Leo: Leo, at age 25, started his 40-year retirement plan. He found a job with a good retirement package and started putting a modest sum of his monthly income into a matching retirement fund set up by his employer. He also hooked himself up with a competent financial advisor who began to steer him in the right direction.

Bill: Bill, also 25, works for a guy who pays him under the table. The money is great, but there's no incentive to save for retirement and no Social Security benefits being accrued. Retirement is not something Bill has given much thought to. If it is ever brought up, he shrugs it off with “Retirement? I'm only 25. I'll have plenty of time to think about that later.”

Stage two: Anticipation

You're getting close. Only a few more years in the trenches. Retirement begins to seem a little more real, not just a plan on paper.

By now, you should have gone over your plan several times, making adjustments along the way. During this stage, it's important to:

• Have frank discussions with your spouse and your financial advisor about your retirement plan.
• Practice being retired by living on a budget for a while and seeing how it goes.

Leo: Over the years, Leo worked hard for his employer. His hard work was rewarded with a couple of advancements and pay raises. He kept an eye on his retirement package and stayed in touch with his financial advisor.

He and his wife bought a house and raised a family. The kids grew and eventually left the house. Leo and his wife became empty-nesters. They frequently discussed how they would spend their retirement. They even went through a couple of 'practice' runs to see where they might need to make adjustments to their budget.

Bill: Bill finally got a job that started putting money into his Social Security benefits account, but that didn't happen until he was 35. Up to this point, he still wasn't putting anything away toward his eventual retirement.

His lifestyle didn't leave much room for saving money. He could barely handle his rent and credit card payments. Eventually, he got married to a forward-thinking woman who talked him into meeting with a financial advisor. He was 45 years old at their first meeting. What he discovered was disheartening. He needed to buckle down and throw everything he could get his hands on into an account set up by the advisor. If he could do that, he might be able to retire at age 65, but that would depend on what his wife would be able to contribute.

Stage three: The Honeymoon

You did it! It's payoff time, and life is good. No more alarm clock, no more bosses breathing down your neck, and no more stress.

It's time to decompress.

This stage involves:

• Starting a new way of life,
• Feeling good, happy and excited about the future,
• Savoring the moment and not jumping right into your to-do list.

It's okay to have an unstructured day during the beginnings of this period, but don't let it go too long. Take a well-deserved vacation and check a few items off your bucket list, but be sure to stick within your budget.

Leo: Leo retired at 65. His plan was laid out, and he was financially secure. He knew what he was going to do with his free time. An exercise routine, a new hobby, activities, and some volunteer work would keep him busy and healthy. He and his wife took a few weeks to travel around Europe. There was also enough in the budget for a yearly vacation.

Bill: When Bill turned 65, he wanted to retire in the worst way, but he still didn't have enough money in his retirement account. He had to work for several more years. His wife kept working as well in order to help pump money into their account. They lived a meager life until the day finally arrived and Bill retired.

There was a honeymoon period of sorts. Throwing his alarm clock into the trash was the extent of his celebration. There wasn't enough money for a big vacation, but he and his wife did splurge and take a road trip to the Grand Canyon.

Stage Four: Disenchantment

This is the time when retirement remorse kicks in. You begin to second-guess your retirement decision. Don't be alarmed, this is normal.

This stage includes:

• Feeling like you have made a mistake,
• Feeling slightly depressed,
• Feeling off-kilter, bored, and possibly useless.

It can be difficult to adjust to a new routine after having the same one for forty years.

Leo: After returning from Europe, Leo is feeling weird about not getting up and going to work. This isn't his "normal" routine, and his subconscious mind is letting him know it. He begins to wonder if he made the right decision and starts to take a second look at his retirement plan, thinking he might have overlooked something. His wife reminds him of their discussions that included this moment and calms him down, reassuring him that all is well and they will be just fine.

Bill: After his trip to the Grand Canyon, Bill realizes they spent way too much money and blew their first month's budget. Now they have to scrimp on the non-essentials until they can get caught up. Bill thinks about going back to work, but his health isn't the best. He dismisses the thought of a part-time job at the local McDonald's. He and his wife's retirement plan didn't include more than the financial aspect, and trying to figure out what to do with their time usually revolved around somehow making more money.

Stage Five: Reorientation

Once you make it through stage four, you begin to get back on track.

You work out your new routine to put a little structure back into your life. You begin to work on your hobbies and get your activities lined up. Staying motivated is essential, and volunteering helps you stay connected with people and gives you a sense of satisfaction. It feels kind of like work, but not really.

During this stage, it's important to:

• Get into a routine.
• Structure your time.
• Develop your hobbies.
• Stay active and motivated.
• Socialize.
• Be prepared for bumps in the road.

Leo: Leo realized the importance of getting motivated. He had a rough understanding of what his new routine would look like, and now it was time to put it into full swing. He and his wife worked together at structuring their activities and contacting the organizations they planned to volunteer at. They recommitted themselves to making the most out of this new phase in their lives.

Bill: Bill and his wife spent the bulk of their time avoiding this phase. They hadn't planned for it and didn't have a clue on how to get past it. They watched a lot of television and sat in front of their computers. It was a distraction. They did socialize with a few close friends, but their conversations usually turned into "bitch fests" as they complained about their lack of money, with the government usually being the whipping boy of choice.

Stage Six: Stability

• Being content with your purpose in life.
• Keeping yourself healthy by eating well and regularly exercising.
• Your new routine has become second nature.

Leo: Leo and his wife have fully accepted the fact that they are both retired. Their finances are stable, they stick to their budget, and they have both found their purpose in life. They are living a successful retirement lifestyle.

Bill: Bill and his wife can only afford to buy processed food. Food stamps help them get over their financial hump each month. Bill fell back into an old habit of smoking. The television and computer are their main sources of entertainment. They didn't plan, and in the end, their retirement lifestyle is not satisfying.

Conclusion:

The six stages of retirement are the same for everyone, including Leo and Bill.

Leo and Bill are fictitious characters and each falls to one of the two extremes: one is successful and one not.

Most of us fall somewhere in a very broad middle. We may not have much extra cash, but we have enough to be comfortable. We've managed to formulate some sort of cohesive plan and we know the different stages and we understand the importance of each one as we go through the retirement process. We work the process to the best of our ability. If you've paid close attention and stuck to this process, you've probably done well for yourself. If you ignored it, you've done so at your own peril.

There is no timeline to get through these stages, and it could take years for some.

Individual circumstances may be different, but everyone needs to start the process as soon as they can. The longer you wait, the harder it will be to get across the finish line with what you need to succeed.

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