When we think about our childhood, our memories stretch from our days running around kindergarten, through to our delinquent teens smoking durries out the back of the bike sheds. Childhood as a catch-all stage for our younger years fails to define such a varied stage in our life. 

Similarly, retirement, the moniker for the time after our careers come to an end, is unnecessarily broad. People should be planning for their retirements (the years after 65) to last at least 25 years and will encompass several different phases, so why do we bother painting it with just one brush?

Retirement can be broken down into at least four stages — all of them exceptionally different from the next. They all have different financial requirements, all of which need to be factored into your retirement financial planning. 

The first step before getting into this is to figure out how much money you’re going to have at retirement. Allocate funds to your honeymoon phase, the first five or so years of proper retirement, the get real period which will last until you’re 70-75, and then the sunset hours for your lovely waning moments. 

Transitioning

You’re heading into your mid 60’s when your superannuation is kicking in, and things are starting to feel great. You’ve still got a lot of pep in your step, and probably don’t want to be all out quitting your job just yet. It is a perfect stage to cut down your hours, move into consultancy work, or decide to become a real estate agent. Keep the money coming in but don’t overdo it. 

For this period, you should focus on making enough money to cover your expenses, without putting your back out. 

It is the time to start planning out the different phases of your retirement and make sure you have enough saved to live the life that you want and also make sure that it is invested conservatively enough to avoid any nasty surprises if the markets misbehave.  

Honeymoon phase

After a lifetime of saving, you deserve to spend some of that hard-earned money. It is the period to tick the fun things you’d always planned on doing off of your list, and you couldn’t have a better time doing it!

This is the most expensive period of your retirement - some people find that their expenses go up during this period.  All of a sudden you will have more time so will want to go on long trips, take up different hobbies and learn new skills.  

This is a stressful time financially as you are no longer working, so you now have a set amount of savings, and you’re not quite sure how long you will need those savings to support you with. A general rule of thumb is that you can spend c.4-5% of your retirement savings pot each year for it to last you 30 years. If you can, try and stick to this rule.  

The get real period

You’ve just had the time of your life for a half-decade, and it’s time to get a little real. Your body isn’t feeling as good as it was and you’re napping more than you did before. It is an excellent time to use some of those savings to make sure you’re fixing the roof and getting your house in order while you potter around the garden and enjoy yourself.  

This is a period where people often start to spend less as they are no longer eating out at restaurants and making the big trips they were doing earlier in their retirements.  

Sunset hours

You should still have money in the bank to pay for whatever you’re keen on for your waning years. Whether that’s moving into a retirement community, back in with the kids, or wherever is going to be comfortable for you as you enjoy the final part of your chapter. 

Unfortunately, the sunset years can be some of the most expensive. Health and care costs can eat into your retirement savings at an alarming rate. However, at this stage, you are often able to release the equity in your house to move into a retirement village, or you can even take out a reverse equity loan — both useful tools to help you get through those sunset hours.