An increasing number of people envision retirement as this phase where you finally stop working and start to live your life a little. However, they couldn’t be farther from the truth. In fact, retirement can be categorized into three distinct phases. Wondering what they are? Continue reading to find out.
The Three Retirement Phases
For any individual, retirement can be classified into three different phases - active phase, slow phase, and inactive phase. Here’s what these stages represent.
1. Active Retirement Phase
The initial period of time where you’ve just retired after working for years is known as the active retirement phase. During this phase, you lose your main income stream. However, since you would have just gotten your retirement benefits such as Provident Fund, Gratuity, and Superannuation Fund, among others, you don’t necessarily feel the impact of losing income immediately.
The active retirement phase is when you discover that you have more time on your hands than ever and start to spend more time with yourself, your family, and on your long-lost hobbies. As soon as you enter this phase, you may revisit your finances and analyze them thoroughly. Since you no longer have a steady income stream to back you up financially, you might have to tone down your risk aggressiveness and shift your portfolio over to more stable options and retirement plans, while still accounting for inflation.
2. Slow Retirement Phase-
The phase of your life where you get used to your retired life is the slow retirement phase. By now, all of your and your family’s major goals would have been successfully satisfied. Your children, who were dependent on you up until this point, might have either gone on to build their own careers or might have gotten married and settled down.
Considering the fact that you’re aging, your health can deteriorate rapidly if you don’t take care of yourself properly. That’s why it is important to ensure that you’re always mentally and physically fit during this slow retirement phase. Also, now may be the right time to make sure that the entirety of your investment portfolio is conservative. That’s not all. If you haven’t yet created a will for yourself, now may be the right time to draft one. This will ensure that your legal heirs face no hurdles when claiming their inheritances after you’re gone.
3. Inactive Retirement Phase
This is another phase of your retirement life. Your age and your physical health may starts to slow you down. Your medical expenditure may also see a steep rise right about now as well. The health insurance policy that you’ve invested in, will come in handy right about now.
That said, although a major part of your medical expenses will be covered by your health insurance, it is also important to be ready to spend a portion of them out of your own pocket. That’s precisely why at this point in time, it is extremely important to manage your finances, physical and psychological health, necessities, and your medical expenditure properly.
Doing so will help take a lot of burden off your shoulders. You might even be facing some difficulties having to manage all of them simultaneously.
Non-financial aspects of retirement that you have to be prepared for
Retirement life is not only about managing your finances to ensure that you’re able to live life according to your own terms. There are other non-financial aspects that you would have to pay attention to as well. Here’s a quick look at a few of them.
● Psychological fortitude
After leading a busy life, not everyone can turn off their instinct to work immediately. It requires a lot of self-convincing. You will have to mentally prepare yourself to lead a slow life post-retirement. You might going to be at home and have very little to do. And so, it is important to keep yourself engaged both physically and mentally. You could pursue some hobbies or find new interests in life to make it more interesting.
● Getting your family ready
Just like how it is important to make yourself ready for retirement, it is equally crucial to prepare your family for it as well. Seeing you at home all the time for the rest of your life is something that they might not be prepared for. So, they might need some time adjusting to this new change before they start spending time with you.
● Finding an identity for yourself
And finally, retired individuals may feel lost after retirement. That’s why it is important to create an identity for yourself, outside of your profession, once you’ve finally hung up your boots for good.
These three phases of retirement are something that individuals may face at one point in their lives. Therefore, it is important to be prepared financially before you even enter the first retirement phase. This way, you can seamlessly transition yourself into the second innings of your life. Also, consider investing in retirement cum life insurance plans that are suitable for you. This will ensure that you live a carefree life without having to worry about finances at every single turn.