Expert Outlines Four Phases of Retirement: Preparation is Key for U.S. Seniors

Phases of Retirement | Man and Woman Standing in Front of Building's Window

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As retirement approaches, many Americans focus on financial planning, ensuring their savings will last through their later years. However, Dr. Riley Moynes, author of The Four Phases of Retirement: What to Expect When You’re Retiring, warns that many overlook the psychological transitions that come with leaving the workforce.

In a recent discussion with retirement-planning specialist Adam Bornn on the Parallel Wealth podcast, Dr. Moynes detailed four distinct phases of retirement that retirees should be prepared to navigate.

Phase 1: The “Vacation” Phase

The initial stage of retirement often feels like a long-awaited vacation. With no job to tie them down, retirees find themselves with ample free time, which they often spend on leisure activities like traveling or pursuing hobbies. However, Dr. Moynes cautions that the freedom of this phase can lead to excessive spending, potentially jeopardizing long-term financial security. He advises retirees to establish a budget and consult with financial planners to ensure they make prudent financial decisions during this phase.

Phase 2: The “Feeling Lost” Phase

As time passes, the excitement of newfound freedom may wear off, leading many retirees to feel adrift. Dr. Moynes refers to this stage as the “feeling lost” phase, characterized by a sense of loss stemming from the absence of routine, purpose, and social connections that work provided. This phase can be particularly challenging, as it often coincides with mental and physical decline, depression, and in some cases, divorce. Retirees in this phase must remain vigilant about managing their health and finances, particularly with the rising costs of medical care.

Phase 3: The “Trial and Error” Phase

In the third phase, retirees begin the process of rebuilding their sense of purpose. Dr. Moynes describes this stage as one of “trial and error,” where retirees experiment with new roles, activities, and hobbies in search of fulfillment. While some may struggle to find their footing or even revert to earlier phases, persistence is key to progressing to the final stage of retirement.

Phase 4: The “Reinvent and Rewire” Phase

For those who persevere, the final stage of retirement can be the most rewarding. According to Dr. Moynes, only 60% to 65% of retirees reach this phase, where they successfully reinvent themselves, reconnect with others, and make meaningful contributions to society. Financially, this phase may involve revisiting estate plans or engaging in philanthropy. Retirees who take on part-time work or other income-generating activities may also need to adjust their budgets to reflect their new circumstances.

Dr. Moynes emphasizes that retirement is far from an endless vacation. It requires ongoing introspection and adaptability to ensure a fulfilling and financially secure life in one’s later years.

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