People often forget that retirement has several phases. There is a tendency to conveniently place it right after one has stopped working and lump everything together into an indiscriminate episode. It should be noted that each phase has its own unique challenges: physical, emotional, financial, etc. All these might require very specific approaches and solutions that are tailored to the changing needs of the retiree. A one-size-fits-all method might deprive one of the possible joys of retirement.
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Here are some of the basic considerations one needs to reflect on for each discernible stage, which in the end might prove to be the most practical and life-affirming plans a person can make to have a delightful retiree’s life:
Although this is not yet retirement proper, one should already assess foreseeable sources of income once the paychecks stop coming. It is advisable to check the status of one’s defined contribution plans and social insurances. There might also be a need to evaluate the ratios of expenditures, investments, and savings to avoid being shortchanged in the next 10 to 15 years during the first technical phase of retirement.
The spending will surely go through the roof in the early years of retirement. People are inclined to think that they have won some kind of lottery, and purchases and travels are simply rewards they ought to get for themselves after all the hard work. These might be balanced by the fact that you no longer need to spend too much on clothes, gasoline, or contributions. One should make definite arrangements though for augmenting the income just so one can continue enjoying this phase.
Social insurances and other benefits from employment plans will usually kick in around this time. That means new income. The travels and other luxuries might take a backseat, and retirees might prefer to spend more time with the family. This should be a good time also to review your asset allocations and estate plans.
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Obviously, one will spend a lot on health care during this stage. For some cases, it might still be a wise thing to continue revisiting funds and investments for the remainder of one’s life and for the loved ones who will be left behind.