The beginners guide to retirement part 1:The stages of retirement

Stage one: The transition from full-time work to retirement

Most people go straight into stage two, without regard for stage one, but retirement is a big change in our lives that cannot be underestimated. Generally speaking, we transition from working for 40-50 years according to someone else’s timetable. Approximately 100,000 hours. Our days are structured. We know exactly where we need to be and when.

When we make the decision to leave our jobs we need to determine our own timetables. We need to structure our own days. If we can’t find our passion we will go stir crazy with nothing to do.

The transition can be a shock to the system from a psychological perspective. It draws comparisons of some prison inmates that would rather remain behind bars than have the freedom. They become institutionalised. It is what they know. They need the structure. Working for 40 years can almost be viewed in the same sense for many of us. Being told what we can do and when, for so long. It is hard to adjust to freedom 

I am in no way comparing the challenges of prison life to a life of work. Just the commonalities in structures. Of course we get more freedoms in our working lives, but there is a limit. And if we don’t do what we are being asked then we are punished. We must comply with the rules.

I know of people that really struggle with this transition for several other reasons.

One of those is not knowing what to do with our new-found time. We have become so conditioned to having someone else make decisions on how to use our time that we struggle when we must take the lead for our own time. Some people finish work to find out that their main life purpose WAS work.

We may no longer be as heavily relied on. We lose our identity. A manager of a corporation for example, is often respected and they feel important. Take that away and it can be difficult for some to adjust.

The final reason for a difficult transition I have seen is it may be difficult to spend your money. We have spent most of our lives saving up for this time in our lives, but when it comes time to spend it, some of us struggle. We just need to have trust in our planning and spend as per the plan.


If we can anticipate these potential mental hurdles ahead of time then we can be better prepared for the change. We can think of the things we enjoy about work and look to replace these feelings in retirement if necessary. For example, if you value being a respected leader at work, then you might like to volunteer as a club president for your local sporting club. If you value interactions with people at work, then you may look to join a club of some sort. It is useful to start thinking of these things a few years before you retire.

What brings you the most joy? You can plan on how you will fill your time. Plan on what your post retirement life will look like. Write it down. With some retirements lasting 40+ years, it is too long to sit back and watch the world go by. Find your passions to help with the transition into retirement.

Another option to ease with the transition can be a gradual reduction of your work hours to part time. Instead of going from 40 hours a week to 0, you could try 25 hours if your work will allow.


Stage two: Go-Go

This first stage of post retirement typically lasts until age 75. Often it will involve world travel and pursuing your passions. You tend to spend more money in this stage of retirement than in any other. In fact, you may even spend more than when you were working. A lot of people under-estimate the cost of living in this stage. Yes, the mortgage may be gone, but you also have all this extra leisure time to spend money. This is your time to have fun whilst still fit and healthy. You have worked hard your whole life and may want to go a little crazy. However, the desire to have fun should conflict with the desire to not run out of money. Find your balance.


Stage three: Slow-Go

In this stage, there is a bit more of a want to slow down. The novelty of travel may have worn off and you would now rather relax a bit and spend time with grandchildren and family. Typically, the slow-go stage is between the age of 75 to 85. Annual expenses typically decline during this period.


Stage four: No-Go

This stage of retirement usually begins at the age of 85. It is generally a time for family and giving. Expenses generally decrease dramatically. Most pleasures are gained from sharing time and experiences with others.


Final Thoughts

Over the last few generations, retirement has changed immensely. Healthcare has improved. Our diets are generally better and we are more active. We are living longer. From Statistics NZ, a female born in 1970 can expect to live to age 90 on average. Where a female born in the year 2000 can expect an average life expectancy of 93.

Because of poorer health, retirement used to be just one stage – a mesh between slow and no-go. Now, instead of going straight from employment into a slowdown, we are travelling, pursuing our passions, volunteering and spending time with family.

Our planning needs to consider the distinct stages of retirement. You almost need to make 2-3 separate budgets. One for the go-go stage of retirement and another for the slow-go and no-go stages. Each stage has its own distinct budget requirements. Go-Go may be very high in travel costs but low in healthcare. Slow-go may be average in both travel and healthcare. No-go low in travel but high in healthcare. By forecasting your budget based on each stage, you are firming up your retirement planning so that you do not outlive your money. Tip: Do not forget the power of inflation when forecasting expenses.

Flexibility in our plans is a must if we want our money to last. 40 years is a long time and things will change. We need to be able to adjust our plans if the market falls, or if inflation is high, or if our personal circumstances change. Changes in conditions can affect the best laid plans, so we must react and adapt as best we can. In article 12 in the retirement series I will discuss ways you can stress test your financials to help your confidence that your retirement savings will last.

The retirement challenge is not all financial. Do not ignore the importance of stage one – mentally preparing for retirement. Find your passion.

Find something to retire to, not retire from.

Join us next time for part two of the series where we will look at the idea of early retirement and how it is mathematically possible. 



The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here


Do you have any tips you have used approaching retirement? Either mental of financial. If you are retired, have you spent more or less than you thought?