But retirement tends to happen in phases, and each phase places very different demands on our time, energy and finances. Understanding them upfront can put you in a much stronger position to enjoy the early years without compromising the later ones.

The active years (60 to 70)

The active years are when your health is generally good, your energy levels are still high, and there’s a backlog of interests and hobbies waiting to be explored. Travel, classes, volunteering – your to-do list will fill quickly.

But what often surprises retirees during this phase is how much money they’re spending. The costs associated with working life and supporting a family may have fallen away, but they’re quickly replaced by spending on experiences (not to mention new cars and long overdue renovations).

The main risk here is parting with too much money too quickly. The early retirement years are known as the go-go years for a reason, but you’ll need to strike a balance between making memories and preserving your savings. While the more lavish expenses will taper off over time, others – like council rates, utilities and insurance – will continue regardless of how active you are.

A few things that might help in this phase include:

• Making sure you have a clear retirement spending plan that factors in inflation
• Maintaining a cash buffer to fund irregular or one-off expenses
• Checking your eligibility for the Age Pension as you approach 67.

The sedentary years (70 to 80)

This phase tends to herald the quieter part of your golden years. Regular outings become less appealing, doctor’s appointments become more common, and – wonderful as they might be – visits from your grandkids might demand an extra rest day or two for recovery.

As the pace of life slows, we tend to see less spending on big ticket items and more on day-to-day living and hobbies of the more relaxing, if not sedentary, kind. It’s also around this time that healthcare costs start to rise.

So while this phase might not be as eventful as the first and last stages, it marks an important inflection point as far as your finances are concerned. Some things to consider include:

• Ensuring your income streams are simple, reliable and easy to manage
• Deciding whether to downsize your home
• Planning for higher healthcare costs without assuming they’ll be covered entirely by Medicare
• Making sure your will, super beneficiaries and powers of attorney are up to date.

The frail years (80+)

The final phase of retirement is the one furthest from people’s minds throughout their working years, but it’s often the most expensive and least flexible.

It’s during this phase that health issues become more pressing and daily tasks start to require assistance. Some people remain at home with support – whether it’s family, carers or mobility-friendly home modifications – while others move into aged care facilities.

Whatever you choose, there’s still a lot of uncertainty around long-term costs. While average life expectancy statistics can provide a rough benchmark to help you plan, they can’t be treated as predictions. You might have to fund your lifestyle for another decade or two beyond what you might initially expect.

Preparing for this phase involves:

• Understanding how aged care funding works and how your income and assets may be assessed
• Reviewing your super, savings and investments to make sure they can support you long-term
• Staying vigilant for scams and financial abuse, which older Australians often fall victim to.

Planning across all three phases

The most effective retirement plans consider all three phases from the very beginning. Focusing just the early years can leave you struggling later on, when your options have narrowed and money is in shorter supply.

This doesn’t mean predicting every expense or living frugally for decades. But you should recognise that retirement is a long-term journey that requires you to evolve with it.

If you can remain flexible and open to adjusting your spending, lifestyle and priorities as each phase unfolds, you’ll be better placed to enjoy the full spectrum of retirement, from the lively years to the quieter, more dependent ones.

Consider winding down gently

Some people thrive from day one of retirement, while others are at a loss for ways to spend their time.

If you’re worried you’ll fall into the latter category, you might be better off winding down gradually. This might help accustom you to the idea of not working and give you time to ponder ways to fill your days.

Here’s where a transition to retirement (TTR) income stream might help. This involves transferring a part of your super into an account-based pension, allowing you to decrease your work hours while drawing on your super to make up for the reduction in your salary.¹

Introduce some structure

Decades of work tend to accustom us to a particular routine. You might not have always enjoyed waking up early and dragging yourself to the office, but chances are it gave purpose to each day and made you appreciate your leisure time that much more.

If you feel unmoored without those work-based structures in place, it might be worth trying to establish new structures of your own. Try to visualise what your ideal week looks like, then make an effort to schedule a time for all those activities you imagine will bring you joy. And if you feel things aren’t working or your days are still blending into one another, don’t be afraid to switch things up.

Don’t let your mind atrophy

Concerns about declining cognitive health tend to ramp up in retirement, especially if work was at the centre of your life and you had few hobbies or interests outside of it. Those annoying “senior moments” might become more common than you’re comfortable admitting, and it’s easy to interpret them as a potential warning sign of what’s to come.

To help keep your brain sharp, you’ll need to look for other sources of mental stimulation. That might involve activities as simple as crosswords and jigsaw puzzles, or as demanding as learning a new language, taking night classes, or volunteering in your local community.

Retirement is also the perfect time to take up any creative hobbies you didn’t have time for during your working years. Writing, painting, pottery and woodwork are some common ones, but there are countless ways to tap into your creative side now that you have the free time.

Try to stay socially connected

Just as we depend on work to provide structure in our lives, for many of us it’s our primary source of social interaction. With your working years behind you, it can be difficult to meet new people or foster a deeper connection with those you already interact with.

Fortunately, there are plenty of ways you can ward off social isolation. Try to find like-minded people by joining book or film clubs, walking groups, or taking up volunteering. If you have a family with children of their own, offer to babysit or take them on weekly outings. And if transportation is an issue, technologies like Zoom and Google Hangouts offer the chance to connect easily with friends from the comfort of your home.

Keep physically active

The benefits of physical activity at all ages are well known. Not only can it help your mobility, balance and endurance, it can also prevent or delay many of the health problems associated with old age (such as heart disease, diabetes, stroke, and serious injury after a fall).

There’s also plenty of evidence that suggests physical activity is good for your brain. One study of more than 450 older adults (averaging 90 years old) found that increased levels of physical activity were associated with a slower rate of cognitive decline.²

For people aged 65 and above, it’s recommended that you engage in at least 30 minutes of moderate intensity physical activity each day (for example, brisk walking, swimming and aerobics).³ If that seems like too much at the moment, start with just 10 minutes of activity once or twice a day and try to increase it when you’re ready.

Sources

1 MoneySmart
2 National Institute on Aging
3 Health.gov.au