Life has various stages. Your plan needs to take them into account. 

If there is one thing, I have learned in my over 40 trips around the sun it is that life never happens in a straight line. Markets don’t just go up at a consistent 7% a year, last month’s budget never mirrors this month’s spending, and the emergencies you are prepared for are rarely the ones that actually happen.

Yet, despite the fluidity of life itself, too many planning for retirement use a very cookie cutter approach to what life will look like post-career. When determining how much of a nest egg is needed to retire, many do-it-yourselfers, and even some professionals do not do enough to account for variances within the plan. Often, they simply determine a single annual amount that will be needed for expenses throughout retirement, they then multiply that number by the person’s life expectancy, and after adjusting for inflation and investment growth call it a day and hope the person’s time runs out before the money does.

I don’t know about you, but I can’t predict what life will be like a year from now let alone 30. That’s why determining a one-time amount for what you will spend each and every year of retirement is borderline ridiculous. Like every other phase of your life, retirement has many different stages that come with different challenges and advantages. To be successful in your retirement you must first recognize these different periods and account for them in your plan.

Michael Stein, author of “The Prosperous Retirement” first popularized the idea of three distinct phases of retirement that he called the Go-Go years, Slow-Go years, and No-Go years. Generally, I agree with this characterization of these three stages of retirement, but I would argue it is more of a spectrum where each year the retiree moves incrementally a little bit more away from one stage, and towards another.

So what exactly do these stages look like and how should you prepare yourself for each? Today, let’s look at all three.

First up, are the Go-Go years. In this phase, the retiree is generally in good physical health, and excited to have the time and energy to do all the things they couldn’t while working. It is also the stage where the most crucial mistakes can be made.

I have seen first hand the damage people can do to their lives by becoming too swept up in the excitement of being able to do whatever they want, with no responsibilities holding them back.  Often these individuals spend far too much of what they have saved on toys and trips, only to be left empty by the lack of purpose they find in their lives shortly thereafter.

This is why I generally recommend individuals entering the Go-Go years of retirement maintain part-time employment doing something they love. Along with helping emotionally in the transition to retirement, it also provides a little added income and reduces the temptation to spend more than they should.

How long this Go-Go phase last varies substantially from person to person. Health and financial factors certainly play a role in its duration. I would say it is around age 70 where most have fully moved into the second stage of retirement, the Slow-Go Years.

It is in this phase that the excitement of retirement has worn off. Impulsiveness and curiosity has given way to routine and predictability. This is the stage where most seniors focus the most on hobbies, outings with friends, and time with family. While these are certainly the least expensive years of retirement, I would also argue they are the years where most feel the highest levels of contentment and happiness.

Finally, somewhere around age 80 most have transitioned fully into the No-Go years. These are the years you probably start spending more time with your doctor than your friends and family. Because of this some expenses go down, but health expenses go significantly up. As can the cost of housing if you are forced to move into an assisted care or nursing facility.

Whether you are planning for retirement or in the earliest stages of it. Knowing what to expect in the coming years is vital to having a good financial plan. For most, retirement planning is far to complex to do on your own. I strongly suggest you partner with a professional that can help you navigate the retirement years in a wise and prudent way. Thus, getting the most out of these years of your life.

(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)