Have you ever thought about how long retirement can potentially be? Consider – if you divide your life into increments of 8,000 days. From birth until college graduation at age 22 is approximately 8,000 days. The next 8,000 days would take you from graduation to age 44, close to midlife. Add another 8,000 days and you are near retirement or possibly in retirement at age 66. When you add another 8,000, it puts you into your mid-80s. With the average life expectancy for a male right now at 85 and for a female at age 87, the expectation that you could spend 8,000 days or more in retirement is viable. If you are one of the individuals with longevity and live beyond age 100, you can quickly be adding another 8000 days in retirement for a total of 16,000 days.
Are you prepared for 8,000, 10,000, or 15,000 days in retirement? 15,000 days would put an individual just over the age of 100 and we are certainly seeing many individuals living to age 100 and beyond.
Generally, you are not working or earning little income in the first 8,000 days of your life as you go through school. The second 8,000 days can be good earning years. However, this is also prime expense time. You are purchasing and paying for houses, raising and educating children, and possibly even still paying for your schooling by paying off student loans. You need to be managing your expenses for the 2nd 8,000 and 3rd 8,000-day period while also saving and preparing for that 4th 8,000-day period.
When you get into that 4th 8,000-day period (or it might be a 10,000 or 15,000-day period), retirement is beginning. Making that change from accumulating dollars for retirement to going into the distribution phase is often fear-provoking. There are many questions we consistently hear. Have I saved enough money? Where do I get funds from? How do I access retirement monies and in what order? Which pension option should I choose? Individuals may have difficulty making decisions about when to collect Social Security. Often, they are confused about Medicare and what is covered versus not covered.
There are a lot of non-financial decisions and choices that will be happening also. We often think of retirement in four phases: honeymoon, decision making, longevity concerns, and the solo.
The honeymoon phase of retirement comes at the start of retirement. If you are a traveler, this is the time you are healthiest enough and still have the energy and desire to travel. With what seems like a 24-7-365-day vacation, you are free to pursue many of the interests and hobbies you have been dabbling in and find new ones. With individuals having children later in life, some may still have some child responsibilities. It may be grandchild responsibilities. A recent phenomenon is that you may be entering into retirement with a need to care for an aging parent. This is the sandwich generation where individuals are taking care of children and parents simultaneously. Many individuals are also choosing to retire from their high-stress job or the job they do not like while continuing to work part-time or even starting their own business.
The next phase, known as the decision-making phase, is where we potentially see some major life-changing decisions. Housing changes can be one of those major decisions. Does downsizing appeal to you? Are you concerned about the inability to “do stairs” or have a desire to escape home maintenance? Are you looking to move closer to children or grandchildren? To move to a warmer climate or maybe be that snowbird? Are you concerned about the availability of health care? Are you interested in a housing arrangement where you can age in place, where there is transitioning available as needs change?
The third phase of retirement often is littered with managing health. More than 75% of individuals in this phase have two or more chronic conditions they are managing. There are lots of doctors’ appointments and medication management. Many begin having concerns about being able to remain mobile and independent. In some cases, managing health can seem like a full-time job.
Your life may also be disrupted because friends or family members are having health issues. This may mean the inability to maintain the same social life. Individuals may not be available for social activities. You may not be available because you have become a caregiver for someone else.
The final phase, the solo phase, brings even more health concerns. It is not unusual that one part of a couple has died and there is a newly single-person household. Conflicts can occur between parents and children as you try to maintain your independence and your children are concerned about making sure you stay safe. Friends and associates have died, meaning the isolation, loneliness, and time spent alone increases.
Each of the retirement phases has its own set of emotional and physical characteristics. The honeymoon phase can be where dollars are being spent on enjoying the newness of retirement. Emotionally, for some, it is an easy transition. For others, it is difficult as they deal with the separation from a work identity. This can be the healthiest phase of retirement for many.
During the decision-making phase, it can be emotionally draining to have to decide about leaving the family home. Trying to clean out 40, 50, or 60 years of accumulation can be physically exhausting in addition to the emotional upheaval. Monetary concerns can be the primary driver or may not even be a consideration during this phase.
Managing health during the longevity phase can be time-consuming, financially draining, and physically debilitating. Worries are passed around among yourself, a spouse, and potentially children. Caregivers may be needed. This may be children providing that care. Issues may arise between siblings or between the children and parents as to what care is necessary. This may mean the hiring of professional caregivers, which can create a different set of issues – either financial concerns or dealing with the emotional impact of dependency.
The solo phase can often be about a loss of freedom and greater dependency on others. If there is the possibility of running out of money, it generally becomes most prominent during this phase. Depression can frequently be present. Isolation can bring it on. Grieving for the deaths of a marital partner, siblings, and friends can often be a cause. The loss of mobility and independence can be emotionally draining.
The four phases, and most especially the last three phases, can also be those “golden years” we all hear about. The freedom to do what you want to do and to follow hobbies and interests can be exhilarating. Children, and especially grandchildren, can bring a lot of joy to retirement years. If you can remain healthy and independent, these may be some of the best years of your life.
For the golden years to have a chance at being golden, you must be prepared financially. During the 2nd 8,000-day period and that 3rd 8,000-day period, retirement savings are going to determine what you have available during that final 8,000, 10,000, or 15,000-day period. Planning with Purpose is here to help you plan for that final period of your life and help you work through the four phases of retirement. We want you to be confident that your retirement can be all that you want it to be.