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During our working lives, we must adapt and react to changes in our circumstances.  It’s the same in retirement and we’d like to share what we’ve noticed from dealing with clients who are retiring (and retired) on a regular basis.  Retirement seems to have 3 stages to it.  So, let’s have a look at them.

Stage 1: Go Crazy!
Well, perhaps not ‘crazy’ but certainly there’s a tendency for you to want to fulfil many of your lifelong dreams.  Most people retire relatively young and still have the health and energy to want to do some exciting stuff once they’ve retired.

In future blogs, we’ll be talking about 100 fun things to do in retirement but, typically, you might want to:

  • Travel
  • Spend time with friends far afield
  • Take up hobbies you’ve never really had time for
  • Become creative by learning new languages or skills
  • Do work on your house, possibly with the future in mind

This phase can be the most expensive one and it’s likely that your pensions and other investments will be called on more to support this, perhaps 10% to 20% per year more than will be spend in stage 2 of retirement.

Factoring this higher expenditure is something we help clients plan for.  Investment markets are unpredictable so you need to be able to make you can do what you want to even if markets fall.  If the markets don’t go to plan, you might need to adjust.

Stage 2: Settling Down
Spending typically drops during this period.  You’ve got used to this thing called retirement and are likely to have a done a lot of what you wanted to do.

It might be that you’re not as fit and healthy as you were earlier in retirement and you might want to take things a little easier.  Family issues might become more important to you and your grandchildren (if you have them) can be at an age where you can develop strong relationships with them.  We often have fond memories of the relationships we had with our grandparents.

Typically, you’ll spend less in stage 2 of retirement than you will in stage 1 and your pensions and investments may have also benefitted from being invested so it could be that you don’t have any money worries.  That said, the issue of care and medical costs, now or in the future, could be something that’s on your mind.

Stage 3: Winding Down
This stage of retirement can still be great fun but it’s likely that you’re not doing the things you were doing in stage 1 and 2.  Your retired life is likely to be at a slower pace and you probably won’t have the energy or desire to go ‘crazy’ like you may have done before.

You’ll probably see a further fall in your day-to-day retirement spending.  Hopefully, your health will be good but you never know and it could be that you’re struggling or you may even need involved care.

You might be thinking about the impact long-term care might have on your pensions and investments and you’ll want to know that you won’t have to compromise on any care you need because you don’t have the resources.

Another issue you might be considering is to whom you might want to leave any unspent assets after you’ve left us.  This will usually be direct family members but there might be charities or other organisations that are important to you that you might like to support.

It’s Not Rocket Science
You might be reading this thinking ‘so what’ or ‘that’s obvious’.  It is obvious but everyone is different and will walk a unique retirement path.  No-one knows what retirement will throw at you but having some idea of what might come your way and what it might look like helps keep things clear.

Consider the 3 stages of retirement, even if you’re a long way off from it.  We urge you to be realistic about how much income and capital you’ll need to have a fulfilling and enjoyable retirement.  Consider some of the more negative aspects such as care in your older age.  It’s a miserable subject but a reality for many so it’s important to be aware of it.

Take Time to Plan
I’ll finish by saying it’s important to plan.  As a financial planning business, we’re bound to say that but it’s crucial to have a retirement map in your hand.

It will help you understand the road ahead and whilst it won’t be 100% (we get lost even with the best maps!), well laid retirement planning should mean less surprises will come your way.

Happy retirement!…