The Third Phase of Retirement: Reflection

Traditional discussions about retirement planning often involve two objectives – accumulating enough money to last a lifetime, then having a way to pass it on to your loved ones. However, there’s a big chunk between retiring and dying where you’re navigating life’s transitions. This three-decade period has been the focus of this series. There are three phases of retirement. Each is defined more by distinct situations, needs and financial needs, than by time. And each has unique planning opportunities and challenges.

The third phase known as Reflection isn’t as fun or active as the first two – Honeymoon and New Directions – because you’re making the more difficult medical and lifestyle decisions. There are two sub-components – the longevity phase (accepting the inevitability of aging) and the solo phase (where a couple becomes single).

  • Primary retiree concerns – It’s often a time of reflection – a life well lived, and uncertainty – how our exit will go. Life has slowed and you’re spending more time at home preserving memories and talking with family and old friends. Health and finances may limit your choices in life. Doctor visits rise as physical and cognitive conditions decline. Caregiving increases as a receiver or giver – one in four American families provide nearly 21 hours per week for care to a loved one. You don’t want to be a burden and focus is getting loose ends wrapped up for less mess left for the kids; and there’s a renewed concern – will my spouse be ok without me? Simultaneously, the kids are worried if mom and dad are going to be ok and what changes they may need to make.
  • Cash flow planning – Three challenging situations require management – Declining revenue and assets, and rising costs. A couple’s income might decrease after a death from reduced pensions and Social Security. Costs rise for healthcare and professional caregivers. Fidelity Investments estimates healthcare costs for a couple age 65 to be $280,000 (excludes long-term care) and inflation. And living alone at home might be cost prohibitive if professional aids are needed – 24/7 care at $20 per hour is $14,400 a month and excludes the cost of Boost drinks and personal care goods. The most expensive period for a couple may be when the first spouse moves to assisted living – you’re maintaining two households. Finances are easier when the second spouse needs advanced care – you sell the house.
  • Legal and estate planning – Your professional advisory team and estate plan should be in place due to the higher risks of diminished capacity and health. And estate plans should be updated at a minimum for any of the “5 D’s” – decade, divorce, death, diagnosis and decline (American Bar Association).

How’d you do in Mind Reading class? Getting your wishes in writing will greatly help your loved ones. Conversation Project was a survey that included end of life planning. Over 80 percent said it was important to have their wishes written down, but only a quarter had done so.

Many tools are available including advanced medical directives, POLST, Power of Attorney for Healthcare, etc. through your attorney, healthcare professionals and online. However, I will highlight a couple to stimulate deeper thought.

  • “Five Wishes” helps remove the guesswork. You express how you want to be cared for at end of life. The five areas include who you want to make decisions for you when you cannot, types of medical treatment you want (or not), your desired level of comfort, how you want people to treat you, and what you want your loved ones to know.
  • Check out Susan Turnbull’s website on ethical wills and letters to trustees. The legacy you leave goes beyond material wealth – your personal stories, wisdom, feelings and advice are worthy of being passed on. The practice of communicating what one thinks is important to younger generations dates back to the first parents. Jewish men began to formalize this practice in the 12th century by writing personal treatises to their sons on how to live an ethical life. And Susan’s modernized it into “love letters” to family members, letters of wishes to trustees and expressions of donor intent.

I end with a story about a beloved comedy team, Burns and Allen. The duo’s career started in vaudeville theater and spanned four decades including theater, radio, TV and film. Burns signature sign-off to their popular TV show was “Say goodnight, Gracie.” Gracie said her final “Goodnight” in 1964 when she died from a heart attack at age 69. But with his trademark cigar, George continued his career as a comedian, actor and singer for a total of seven decades. He’d visit his beloved Gracie’s grave once a month to share what was going on in his life. His onstage characters and jokes reflected his attitudes about life and often poked fun at aging. One of them was “How can I die? I’m booked.” George Burns died at age 100 in 1996.

Good luck to you!

You can also view this article on Reno Gazette Journal.

About Brian Loy

Brian Loy writes insightful and inspiring articles about the ever-changing world of personal finance and the global trends that affect the risk and return on investments and shape the financial- and retirement-planning process.
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