The Stages of Retirement Planning

Above all else, planning is where you achieve success in arranging for your retirement. Planning involves identifying the issues that you’ll face and how much time you have to deal with them before you retire.

You can’t realistically impose someone else's views or values on yourself. The actual decisions that you make must be your own. The material on this website can help by providing a framework for planning. The earlier you identify the things you must consider for your retirement, the sooner you can get your plans in motion. As you begin to plan for retirement, important lifestyle considerations will arise.

There are four important time stages that drive retirement planning. They are outlined in the table that follows.

Stage 1

Pre-retirement planning

5 to 10 years before retirement

Stage 2

Retirement is imminent

1 to 2 years before retirement

Stage 3

Retirement countdown

6 months before retirement

Stage 4

Post-retirement

6 - 24 months after retirement

In retirement planning, you’ll be challenged by the number of decisions that you’ll face. Many of these decisions are straightforward and should present no major problems. However, there are other decisions that will require you to examine a range of alternatives. Selecting the best alternative can present problems.

The Plan & Evaluate section of this website will assist you in the decision-making process. As you go through each of the areas and time frames below, your planning should result in some form of an action plan. Use the Lifestyle Action Plan to record your plan.

Stage 1. Pre-Retirement Planning (Retirement is Five to Ten Years Away)

Ideally, pre-retirement planning began when you were in your late thirties or early forties. However, in practice, this stage doesn’t usually begin for most people until their late forties. This stage is the most important in retirement planning because it provides you with the best opportunity to take action. By beginning to think and plan well in advance, you should be able to achieve what you want to achieve when you retire.

At this stage, you should assess and determine where you are right now in terms of retirement planning. You should also consider the issues that you’ll face and the decisions that you’ll have to make concerning the kind of lifestyle that you want to have when you retire. If you know early enough what kind of lifestyle you want when you retire, you can begin the financial arrangements to ensure you meet your goals.

Tips at this stage

  • Plan diligently
  • Maintain your savings habits
  • Try out new activities
  • Pay off the big ticket items

Stage 2. Retirement Is Imminent (Retirement is One to Two Years Away)

This stage gives you an opportunity to review your plans, goals and progress and to make some adjustments, if needed.

Tips at this stage

  • Review your plan—are you on track?
  • Review your timeline for expected income
  • Start to restructure investments if you will be drawing income from them
  • Prepare for any lifestyle changes (for example, moving or renovating your home)

Stage 3. Retirement Countdown (Retirement is Six Months Away)

During this stage, there are specific actions that you must take prior to your retirement date.

Tips at this stage

  • Build up a cash reserve
  • Set a date and tell your employer
  • Review employer retirement plans and benefits
  • Apply for government benefits
  • Set up your pre-planned retirement activities

Stage 4. Post-Retirement (Six to Twenty-Four Months After Retirement)

During this stage, you have the opportunity to reflect on some of the decisions that you’ve made. You may also do some fine-tuning based on your experiences in retirement. Remember that planning doesn’t stop once you’re in retirement. As you progress through your retirement years, financial and lifestyle issues will require continuous planning and adjustment.

Tips at this stage:

  • Assess what to do with your time, if your retirement "honeymoon" phase has ended
  • Monitor expenses
  • Update your retirement income timeline
  • Keep your estate plan current
  • Do something occasionally that surprises you or your family
  • Age gracefully and with purpose