5 Stages of Retirement: 1st Stage Transition
By Stan Corey
There are five basic stages in retirement; transition, go-go, slow-go, no-go, and exit. It does not matter if you retire at age 50 or age 80, everyone goes through these five stages, it is just the amount of time spent in each that is the variable. Sometimes the five stages can get compressed while other times what we had expected to be short turns out to last many years. Let’s look at some of the basic issues in each of these stages and how to best navigate through them.
Transition: Which group do you think has a tougher emotional time with retirement, high-income earners or blue-collar workers? Experience has taught me that despite often having a significant amount of retirement savings, high-income earners often find themselves at an existential crossroads upon retirement.
For people who attached a large part of their identity to their job title and status, suddenly losing both can be a shock to the system. No doubt there are plenty of people who don’t earn six or seven figures and fall into a retirement funk, but the trend lines I’ve seen among high-income earners in positions of power and prestige are pretty consistent. Saying the words “I’m retired” can feel like the end of their lives as they’ve known them. They may feel like they have left their reputations and brains back at the office and are frustrated with starting over.
On the other hand, I’ve noticed that blue-collar to middle white-collar employees often transition into retirement with fewer of the mental hang-ups than the higher income earners. Many in the second group celebrate their freedom after decades of hard work and are thrilled to hit the road in their RV. Perhaps this is because they’ve derived less of their identity from their job title and more of it from other aspects of their lives.
No matter what your past income level, it is not at all uncommon for newly retired individuals to feel very lost or anxious during this initial transition stage. As with most of life’s changes, it takes time to make the adjustment, but proper guidance and connecting with family and friends who have already made the transition and done it well can be very beneficial.
Here are five steps you can take to help with transitioning into retirement.
- Have an open and honest conversation with your spouse or partner about how you envision your retirement, including each of your greatest concerns, fears, desires, and wants. This is an essential step during this stage.
- Assemble a team of professionals to provide guidance and advice. The nest egg you’ve created—the savings to finance your plans and dreams—will be significantly affected by decisions you now make, and you should realize you cannot go it alone, even if you’ve gone it alone up to this point. The reason is that everything you know or think you know is about to change!
- Keep family informed of your plans. A key component of a real retirement plan is to involve your family as you develop and implement it. This will increase the likelihood that your wishes will be met and that your family members will act in your best interest. You’ll also avoid conflicts among family members when you need their help the most. Keeping your family informed can be as simple as asking the person you wish to be the executor or successor trustee if he or she will, in fact, want to serve in that capacity.
- Update financial statements yearly. Having an up-to-date financial statement is an effective way to level the knowledge playing field between you and your spouse or partner.
- Update estate documents at least every five years. Laws and your personal circumstances are always changing, and you need to be on top of any issues that may affect your estate plans. In addition, unlike a trust, powers of attorney and medical directives have a shelf life, so they need to be updated and re-executed in order for them to be valid at the time you need them.
I will address each of the remaining stages in forthcoming articles.
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Stan Corey has been a Certified Financial Planner Professional (CFP), Chartered Financial Consultant (ChFC), and Certified Private Wealth Advisor (CPWA) for almost 40 years. Though retired from the day-to-day activity of providing financial advisory services, he continues to consult in specialized areas as a financial fiduciary. Stan is a sought-after expert who regularly provides financial commentary at national conferences, in print and online publications, and on TV. He has a reputation for taking complex financial issues and making them understandable to the average person. He likes to say he is a “financial translator.” He has published two books: a novel, “The Divorce Dance,” in 2016, and a non-fiction work, “When Work Becomes Optional,” in 2018. Web site: www.stancorey.com.