The three stages of retirement

We’ve been talking to older New Zealanders about their take on life, in the hope we can all learn something from them.

Responses have ranged from the great-grandmother who said: “When I see people just sitting about wasting their lives I want to give them a shake. Stop and smell the roses but don’t linger too long” to the winner of our Three Stages of Retirement competition: “No money no choices, that has been part of the mantra of my family life.”

The ‘Three Stages of Retirement’ is our way of encouraging people to think differently about the future and what they can do to prepare for it.

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The word retirement can mean so many different things to people and that meaning has probably shifted from how it was for our parents and grandparents. The early, middle and late stages help to describe the different situations, needs and financial outgoings during retirement.  

These days we are typically living longer, so you could easily be spending 20 to 30 years living through these stages. It is important to consider your changing needs through this period as the impact of choices to spend money in the early stages may impact your capacity to manage challenges brought on by health changes in the later years.    

When it comes to planning for retirement, it can be helpful to think about your spending being in a V shape as you progress through retirement.

Retirement Expenditure Graph

In the early stage lifestyle drives spending, then in the middle stage spending slows as you slow down a wee bit. In the late stage spending may go up due to increased costs relating to health and well-being. The challenge of retirement planning is to preserve enough of your resources to have an income to support you in the late stage of retirement.

The 'Discovery' stage: 65 - 74

This first stage of retirement will, for many, be the 'doing' years. This early phase may be the time to have a go at all the things you've said you'd get around to 'some day'.

The 'Endeavour' stage: 75–84

The middle years of retirement may be more about consolidation, a time to choose fun things, develop old skills, explore fresh talents and grow new friendships.

The 'Reflection' stage: 85 plus

As this third stage is a time when health and finances may limit choice, it's a time to accept help graciously, to make the most of all those memories and to keep up with old friends because you hold each other's history.