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Successfully Navigating The 3 Phases of Retirement Thumbnail

Successfully Navigating The 3 Phases of Retirement


Creating a custom financial model of your future gives you the best framework and lens to make important financial decisions.

Navigating the 3 phases of retirement is just one of the important pieces to consider.

At Divergent Wealth we are state-of-the-art financial planners and investment professionals who specialize in simplifying complicated things.

To create a complimentary customized financial plan, call us at 385-CFP-4000. For information, visit us at www.divergentwealth.com.



The traditional definition of retirement seems to be morphing into something with more flexibility and more stated purpose.

Retirement is unique to the person defining it. Individual values and perspectives vary as people derive joy and satisfaction in very different ways.

For many, retirement means more time with family or grandchildren, more time to travel, or more time to serve.

For others it’s new hobbies, more friends, and more recreation.

Some ambitious retirees find it’s an exciting time to begin a new career, start a new business, complete a degree, or write a novel.

There even seem to be more and more retirees that enjoy their line of work and desire to continue in it, but doing so at a different pace and with more flexibility.

One common thread that can be weaved through most definitions is that people don’t want to be forced to work to make ends meet. It needs to be done on their own terms.

However you define life in retirement, making the most of your retirement year requires a sense of financial stability.

Simply put, life seems to be less stressful and more enjoyable when you have options. The more financially stable you are in life, the options you will have.

With that said, let’s look at the how most retirements tend to fall into 3 specific phases.[1]  



Age Range of 55–74

Retirees in the early stage of retirement tend to be the most active and spend the most money. They have worked hard for most of their lives for the opportunity to enjoy life and focus on things that matter most them. We call these years the “Go-Go Years”.

The go-go years can get expensive if your not careful. Determining the income needed for this phase of retirement is critically important.

Overspending in this phase of retirement can be extremely detrimental to your over-all plan, your long-range goals, as well as your other phases of retirement.

Not tracking this spending, and projecting out the rest of your life may lead to a reduction in the investment principal needed to generate additional income to support the later stages of retirement.

At Divergent Wealth we’ll map out a detailed cash inflow and cash outflow for every year the rest of your life. Each meeting will entail a review your inflows and outflows, important risk factors, and an evaluation of retirement assumptions.

These meetings always result in small adjustments that can help mitigate larger and more costly adjustments down the road.  


Age Range of 75–84

Whether you like it or not, there will come an age where you will start to slow-down.

Spending tends to level off in this mid-retirement phase for several reasons. Paying off a mortgage or downsizing your home, selling a second car, boat or vacation home that you no longer use, a less active lifestyle or the loss of a spouse can all contribute to a reduction in spending.

This second phase is the lowest cost phase of your retirement. With that said, tracking your plan through this phase is still vitally important to making sure your funds are sufficient to Phase 3 and other important long-term goals that you may have.


Age Range of 85+

The Slow-go years will soon turn into the No-go years where getting around is difficult and often requires assistance. Spending and costs tend to pick up dramatically again in this phase. This is usually due to inflation, increased medical expenses associated with aging, potential hospitalization, and prescription drugs

In many cases in-home care and/or nursing home care can drive up expenses substantially during the late stages of retirement. Retirees in good health moving to an independent living facility may also see an increase in daily living costs due to paying rent and other facility charges if they had previously been living mortgage-free.

This phase can often be the most over-looked and under-funded of the three phases. Poor planning in phase 3 can quickly lead to a financial burden on preceding generations.


There are many challenges that must be navigated during retirement. Below is a list of the top 4 challenges we see during retirement.


A sudden market downturn can have a significant impact on retirees receiving regular distributions from retirement plans or investment accounts. Those who are not well-diversified or don’t have the time to wait out a market recovery will be most impacted by severe market volatility.

Market volatility can be especially damaging in the early stages of retirement due to the long-range impact it can have on your income-producing assets.


The spending strategy that is right for you depends on your personal expenses, anticipated lifespan and income sources. Understanding how to modify your spending when faced with unforeseen expenses or a prolonged downturn in the financial markets— especially in the early stages of your retirement—is essential to preserving your income stream.


The longer your time in retirement, the greater the potential that taxes and inflation may erode the purchasing power of your savings and impact your lifestyle. Protecting your assets from inflation as you move forward in retirement is critical to ensuring the income you rely on will be available for as long as you need it.


Modern advances in medicine and healthcare mean that Americans are not only living longer, but enjoying more active and productive lives. However, coupled with rising healthcare costs, longevity represents the single greatest threat to retirement security: outliving one’s income in retirement.



No matter which stage of retirement you find yourself in today, as a group, today’s retirees are healthier, more active and expected to live longer than any previous generation. According to data compiled by the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84 and a woman turning age 65 today can expect to live until age 86. But remember, those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

While longer lifespans are a good thing, longevity also points to the increased need for prudent and comprehensive planning during retirement. This helps ensure essential and non-essential lifestyle needs and expenses can be adequately supported for up to 25 years or more.

The longer you live, the longer your money needs to last. If your spending behavior only supports a period of 20 years in retirement, but you live well beyond that, it’s likely you will outlive your income. Likewise, if your investment portfolio is not generating adequate growth to offset the eroding effects of inflation, taxes and rising healthcare costs over time, living longer can increase both the likelihood and severity of a shortfall.


While none of us knows how long we will live, managing investment risk is critical to helping ensure your investment portfolio continues to generate the income you need throughout your years in retirement.

That requires careful monitoring of your investments and your overall plan. Financial planning is not a one-time event, but a living and breathing process that must be adapted over time. It requires regular adjustments to ensure your asset allocations remains aligned with your risk tolerance and investment objectives.


While growth is an essential component in helping to ensure your income needs are met for 20 or 30 years in retirement, it must be prudently managed. Investment growth helps guard against the damaging effects of inflation, rising healthcare costs and taxes. In retirement, the objective of the growth component of your investment portfolio is to generate earnings that, when added to existing principal, fuel future growth. Investment earnings, when reinvested, can then be used to create a steady stream of new dollars over time that can be repurposed later as income. However, risk and reward must be carefully balanced in retirement for this strategy to be effective.


Routine screenings and check-ups are as important for your financial health as they are for your physical health, but they don’t end with managing and monitoring your investment portfolio. As federal and state tax laws change over time, your tax and estate strategies can quickly become outdated. And outdated estate planning documents, like wills, powers of attorney, medical directives or trust documents can create problems for those appointed to manage your affairs should you no longer be able to do so yourself. Out-of-date documents can also result in unintended tax consequences for beneficiaries upon the distribution of your estate.

At Divergent Wealth, we work with you to help make sure you’re comfortable with your nest egg’s ability to last throughout a potentially long period in retirement before you choose a specific strategy. We can help to educate you on the various tax-efficient gifting strategies and help you implement a strategy aligned with your legacy goals.

Retirement should be a time when life is simpler and less stressful. However, in a USA Today report, financial stress tops the list for creating the most anxiety for retirees, followed closely by health concerns. Fortunately, we specialize in reducing financial stress and anxiety, helping you:

  • Plan for your income needs at every stage of retirement.
  • Manage and monitor investment risk.
  • Develop strategies to minimize the impacts of inflation, taxes and rising healthcare costs .
  • Maximize your Social Security benefits.
  • Ensure important estate and tax planning strategies and documents are up-to-date.
  • Access a simple yet sophisticated method for organizing and coordinating your entire financial life.

We offer a private and secure website customized to your needs that allows you and designated family members to see a complete real-time snapshot of every financial balance you have across your financial accounts and institutions.

This complete aggregation of balances from your checking, savings, investment accounts, credit card companies, mortgage providers and more is available to you 24/7.

Our website also provides you with an accurate, daily net worth statement that dynamically overlays your financial plan, enabling you to view progress toward your goals every step of the way.

Our Divergent Wealth Planning System provides:

  • A dedicated CFP® and relationship manager that will help you create and monitor a comprehensive financial plan.
  • Scenario planning from single-goal or event analysis to a comprehensive financial plan.
  • A comprehensive, aggregated view of all your financial assets.
  • An in-depth understanding of your risk tolerance as well as advising how much risk you should or should not be taking.
  • Real time asset values for your financial plan across multiple accounts and advisors.
  • A method for tracking spending, resulting in a consistently clear understanding of cash flow.
  • Secure, online vault for storing critical documents and information, including copies of your estate planning documents, birth certificates, passports, family photos and more.


Creating a custom financial model of your future gives you the framework and lens to make important financial decisions, especially regarding retirement. At DivergentWealth® we are state-of-the-art financial planners and investment professionals who specialize in simplifying complicated things. To create a customized complimentary financial plan, call us at 385-CFP-4000. For information, visit us at www.divergentwealth.com.

The SCT Library’s mission is to cut through the clutter and the spin to deliver financial straight talk -- to simplify complicated things. These short guides will reduce complex topics to their core issues to assist in making the best financial decisions for your family.

DIVERGENTWEALTH® is changing the way people engage with advisors. They are a competent, dedicated, and credentialed financial partner should you ever decide that’s what you need. Experience the difference at www.divergentwealth.com or call to interview us at 385.CFP.4000.

Divergent Wealth Advisors LLC is registered as an investment adviser with the SEC and only transacts business in state where it is property registered or is excluded or exempted from registration requirements. SEC registration in an of itself does not constitute an endorsement of the firm by the commission nor does it indicate that the adviser has attained an adequate level of skill or ability.

The information contained in this material is given for information purposes only, and no statements contained herein shall constitute tax, legal, or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the needs of an individual’s situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor.

Individual clients should review with their adviser the terms, conditions, and risks involved with specific product or services. Neither the information provided, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

[1] Michael K. Stein, Prosperous Retirement (Colorado, EMSTCO, 1998)