Many of us see retirement as one chapter in our lives where we can enjoy what we have worked hard for in our younger years. In reality, retirees experience different phases throughout their retirement years; the early (active) phase, middle (passive) phase and late (frail) phase. It is important to understand these three chapters and how your health expectancy will affect the need to plan accordingly with your finances.
The early retirement chapter starts from around age 60 where you may continue your pre-retirement lifestyle but start to spend more time travelling, with family or enjoying leisure activities. You may choose to take on part-time work to stay busy during these early retirement years or even plan a big overseas adventure while you’re still active. Generally, during this chapter, you are still self-sufficient in daily living and care needs.
As you move closer to 70 years of age, you may choose to drop any existing working commitments and keep your travel leisure activities closer to home. You might find that it is more difficult to maintain your current home with a need to downsize or hire someone to help you with maintenance and care.
In your early 70s, you will likely start to move towards the late phase of retirement. Your health is more likely to decline meaning that your financial commitments are likely to increase. You’ll probably spend more on health care or aged care in this phase and you’re less likely to be taking on any work commitments.
Understanding the retirement lifecycle
Understanding the overall picture of your retirement, including these important phases, will assist you in planning accordingly. If you need a Financial Planner to help you with retirement planning, the team at APS Financial Planning are here to help! We can assist with your transition to retirement plan, superannuation, self-managed super funds, life insurance and more. Get in touch here to learn more.