The 3 Stages Of Retirement

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Stages Of Retirement

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Retirement is an important aspect of life. With increasing longevity, one cannot stress enough that one has to plan finances for it so that life goes on comfortably.

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3 Stages of Retirement

Retirement can be divided into three phases and the financials are a little different for each of the phases. Let us look at the three Stages of Retirement and how we should manage our personal finance for it –

Active Retirement Phase

This is the phase when you have just entered retirement. You have just retired. You had a regular income which has stopped now but you might have got funds in terms of gratuity (How to calculate gratuity), superannuation fund, etc. (Is Rs 1 Cr enough to retire?) If you were in a business, you might have cashed out your share. You might have looked forward to retirement so that you have time for yourself, your loved ones, and your interests. This is the time when you can invest time and energy in these aspects of life. You might be starting on or looking for another phase of employment or income stream or a business.

You should ensure that you know how much you need to fund your retirement and how much you have accumulated. You should revisit your investment portfolio and tweak it to match the current financial situation. You might have to reduce some of your aggressive investments and increase allocation in conservative investment options. You will not have employer insurance and ensure there is an arrangement for the same. Check if you have about 6 months of living expenses as cash in hand and cash in the bank which can cover emergencies. Your spending will increase in areas such as medical expenses, hobbies, and travel. It can decrease in areas of commute, taxes, and office wear. If you have not drafted your WILL yet, it is a good time to do so.

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It is better to go for a medical checkup to assess your health and take the necessary precautions. This will help in not being caught off guard on the health front which can cause the balance in the personal finances.

Slow Go Retirement Phase

This is the second phase of retirement wherein you are used to your retired lifestyle. Your children might have got married, settled in different homes and cities. (Retirement Planning Vs Child Future Planning) You will find a pattern for your daily life that keeps you comfortable and secure. It is important to keep yourself mentally and physically active. There might be some physical limitations as you are aging.

Your medical expenditure might rise. Expenses like home renovation, tax payments, and financial support for children will reduce.

It will be better if your investment portfolio is more conservative as at this stage in life compared to the earlier stages as your financial losses will have too much of a negative impact to bear or you will take a long time to recover the lost money. Check your will and make changes if necessary at this stage.

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Inactive Retirement Phase

In the last stage of retirement, you slow down your activities. You might need support in terms of finances, physical health, or psychological health.

You may not be earning too much at this stage. It is important to manage the funds in a manner that takes care of your basic necessities, your comfort and your medical expenditure.

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There are non-financial aspects of retirement too that one has to prepare for.

Prepare psychologically – You have to prepare yourself to be at home post retirement. Your life will be less busy. You may not get as many phone calls and emails as you were getting when you were working.

How to keep busy and active – Decide on some hobbies and interests that you want to pursue post retirement. After retirement, ensure you have some activities so that you can be mentally and physically active and life would be more enjoyable.

Family should be ready – You and your family members should be prepared to spend more time together if you are going to be at home.

Identity – You would have always be know as ‘Director of Operations’ or ‘Professor’. But now it will be different. You should be prepared to lead a life outside your profession.

Retirement is an important phase of life and retirement planning should not be neglected. It is good to be aware of the different stages in retirement and have some plan to manage finances for each stage.

Must share how & what your parents are doing after retirement…

Stages Of Retirement
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Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.


  1. Hi Hemant
    Presently I am in the second phase of retirement. I have liquidated most of my investments in mutual funds.However I am continuing my SIPs in some mutual funds.My wife and I have some health issues which are a part of ageing process.Both of us visit our doctors once a month for check up.A considerable portion of our savings is spent on medicines and medical tests.

    • Dear Anil Ji,

      Happy New Year 🙂

      Thanks for sharing your experience – your comments are always valuable to me & TFL readers.

  2. Dear Hemantji, Nice to meet you and we wish you and your family a very happy and prosperous New Year and Greetings for all seasons during this year.

    I retired from Central Govt. service on 31st March 2015. Later I tried to reemploy myself by joining any private concern. But it was not possible. Now nearly two years are getting over after my retirement without any income except my monthly pension and small interest on FDs of my retirement benefits. I need a good planning to have sure and secured monthly/quarterly/half yearly/yearly income by investing in risk free invest plans. I need your advise please.

  3. Retirement planning is really a long process, A person should start planning for retirement as early as possible. If a person starts retirement planning at young age and take necessary measures for the same, then there are chances of earning high rate of return.

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