The five stages of retirement, Part 1

Written by
Peter Dunn

Planning for retirement is your biggest and longest running financial goal, which means it can often be pushed aside for more pressing financial needs. I'm always interested in new ways to teach you about retirement, which is why I brought my good friend Dan Veto on The Pete the Planner Radio Show this week. Dan Veto is a retirement specialist and a good friend of mine. Dan loves to study about retirement, and his passion is palpable. He not only is well versed in the history of retirement, but also in what stages you go through as you plan for retirement.

How much do you know about the origins of retirement? I know, you're already skimming, but hear me out, this is seriously interesting. The future of retirement is unclear, but the history helps shed light on what the future will look like. Retirement is actually a recent social phenomena. As recently as 1900 people didn't "retire" in the way we think of it. Most people didn't live very long, but if they lived beyond their prime they would still contribute to their family's needs to the best of their ability. Most people view the Social Security Act of 1935 as the beginning of retirement as we know it. At the time, life expectancy was around 65 years of age so it was a nice safety net to provide a few years of relief after a life of hard work. Now of course, life expectancy has exploded and Social Security has changed. If you were born in 1900 you could reasonably expect to live until you were 40, if you were born in 2000 you can expect to live until you are 78. In just 100 years, life expectancy has jumped almost forty years! This absolutely affects the future and evolution of retirement.

Now we arrive at the point where we get into the tough questions, is retirement a right? Is it a privilege we deserve? Dan's got so many interesting thoughts and ideas about what retirement is, most interesting is his five stages of retirement, so let's get into them.

The Five Stages of Retirement, Part 1

1) Imagination

The imagination phase is when you are many years away from retirement and you have just a vague idea of what retirement actually is. It sounds like a utopia of relaxing, traveling, and most importantly not working. Even though this view of retirement is enticing, most people when pressed, admit they aren't doing enough to prepare. But even though the inkling of worry is there, retirement is a very long way away and people are happy to dream about it for now with the plan to prepare in the future.

2) Anticipation

In this phase, retirement is on your horizon. You are within 5-10 years of retirement age and things are ramping up. You are excited and ready to retire, but you are starting to panic. You rush into catch up mode. There is flurry of planning, but we are still expecting to have a happy and relaxed retirement. But then, for some, reality sets in. It's the last mile of the race and you realize you aren't going to make it. I've had so many clients over the years who just want to throw in the towel, but that isn't an option. You have two choices: work harder or go broke. Hopefully you'll choose to work harder.

Come back tomorrow for stages 3-5 of the Five Stages of Retirement Planning and make sure to listen below to hear Dan on The Pete the Planner Radio Show on 93 WIBC:

See Part 2 here!

Step up your financial wellness game.

Stay up-to-date with the latest in employee wellbeing from the desk of Pete the Planner®. Subscribe to the monthly newsletter to get industry insights and proven strategies on how to be the wellness champion your team wants you to be.