- Date : 18/03/2022
- Read: 5 mins
Read bout the different phases of retirement and how to financially prepare yourself for it. Go through the importance of proper planning in this post.
Retirement – this single word has multiple meanings for different people. For some, it is all about holidaying in the Maldives, having a fantastic time with a partner or family. And for some people, it may seem an ordeal and a tough period to pass as you grow older. Well, this retirement is actually a time span of several decades. And whatever happens with you during this time is deeply impacted by the efforts and planning you do before you take your retirement. That is why it is essential to be aware of the important four phases of retirement. Read about them below:
What is retirement?
Before you proceed on the different phases of retirement, it is important to know the exact meaning of this process. Well, retirement basically means the time when you no longer are restricted to work for a certain amount of hours in a professional or formal set-up. Yes, some people do some freelancing work during this. As well, but it is entirely optional.
The role of financial planning for retirement
You already know that people plan a lot of stuff for their retirement. But this also includes giving a good thought to your financial situation as well. If you plan for your retirement before time, that is, it helps in spending the later years with ease when you are working. You can consider several options like insurance policies, retirement policies, and so on to simplify this process.
The 4 phases of retirement
Let’s read how your retirement is divided into 4 grand phases.
1. The pre-retirement phase: This phase starts around a decade before you are about to retire from your work. If we consider the most general and formal settings, you retire when you reach the age of 60. So basically, this preretirement phase starts when you hit your 50. During this phase, you have certain goals in your mind for your retirement process. Some of you think of the courses you have to take further on. That is why during this phase you start planning properly about Investing tips and saving money for your retirement years.
You seem to take this period very seriously and there are a lot of options for saving money for your later years. You also hop in the various policies or insurance plans to ensure that you don't face any kind of financial issues during your retirement years. However, remember that soon after several years, you will not receive your monthly paycheck. That is why you should also consider investments in guaranteed assets like properties, stocks, etc. You can also apply for the pensions from your office if they provide you with the same. If possible, you should consider contacting a financial advisor for some investment tips that will help you sort out your future years in a better way.
2. The early years of retirement: The early years of retirement arrive when you have just left your office and find new freedom for yourself. This is kind of an exciting phase of your life. You are not bounded by any restrictions and rules and are free to go anywhere without applying for a holiday. This can be a bit overwhelming for you as well. As you are enjoying your holidays of retirement with your savings and holidaying around so that you can enjoy the free space, remember you need to save for the future as well. If you have wisely invested in an asset that brings a monthly income for you, then this is good. If not, you should ensure that whatever your savings are, you divide them accordingly and then use them.
3. Middle retirement phase: We call it the majority phase of retirement. The middle retirement phase keeps you a bit levelled. You have already explored the free time you got from your work and are considering it seriously for your later years. Yes, if you have a big place, you can think of downsizing it or renting it out or other such easy investment strategies that can bring in more finance to you for your future. You mind your savings, keep them well and spent them wisely during this time. If you follow all these steps, your later years would not be that difficult and your retirement will move on smoothly.
4. The later years: Once you cross 65 years of your life, you step into the later years of retirement. During this time, you seem to enjoy the peace at your place with your partner. Also, you will face a lot of health issues and that is why it is important that you pre-plan your medical insurance or keep an emergency fund so that this face becomes simpler for you. Again, if you have rented out some part of your house or have kept some assets as investments, this income will be highly beneficial for you during this time.
If you read it properly, you would agree that financial planning is imperative for your retirement. This factor seems to be the most prominent in all of these circumstances. Ensure that before you step into this stage of your life, you are ready with all your findings and finances so that you can relax and spend your later years with comfort and happiness.