The Phases of Retirement

For many, the phrase “retirement planning” has become limited to the planning done in the years leading up to retirement. When you consider that your retirement could last for 20 to 30 years, it’s easy to see that your planning won’t end once you transition out of the work force. Chances are good that the things you want to do, are able to do, and can afford to do will change over the years. As a result you will likely have several transitions to plan for.

As a chess fan, I was struck by how similar the phases of retirement are to the three phases of a chess game. In chess, you have the opening, the middle game, and the end game. Let’s take a quick look at each and see what parallels we can draw with retirement.

Phase1: The Opening

The opening of a chess game is all about maneuvering your pieces into position in anticipation of your overarching strategy. How well you develop your pieces in the opening often determines whether you spend the game on the attack or on your heels.

Similarly, Phase 1 of retirement is all about outlining your strategy and getting your pieces into play. Ideally, Phase 1 begins in the years leading up to retirement. You should be thinking about how and when you would like to exit your job, how much you need to have saved, where you’re going to live, and what you’re going to do. Those are all big decisions with lots of moving parts. It is not unusual to spend several years planning for and executing this transition. Once you have the where, when, and what questions answered and are confident that your nest egg is up to the task, you are ready to move from the opening to the middle game.

Phase 2: The Middle Game

In chess, the middle game is where most of the action is. The pieces are in play and each player can get creative. In fact, a good imagination and the ability to execute are two of the most important elements of the middle game.

If Phase 1 of retirement was heavy on strategy, Phase 2 is heavy on tactics. Your strategy is set, and each day is about executing your plan. This is often complicated by the fact that your circumstances will constantly be changing. Your health may change. Your finances may change. A great opportunity might present itself that you hadn’t considered before. All of these things will require you to modify your tactics. 

World chess champion Gary Kasparov once described chess as trying to find your way to a destination using a map that is constantly changing. The same is true in retirement. Your strategy will likely remain the same, but the maneuvers you make to support your strategy will be fluid. The challenge is to wake up each day engaged and ready to act. As is usually the case with chess, you have limited time to make your moves.

Phase 3: The End Game

When the end game arrives during a chess game, you will likely be down to a few pieces. Earlier in the game you either sacrificed them as part of your strategy or had them taken from you unwillingly. Depending on how things played out in the middle game, a change in strategy or tactics may be in order. The available choices and the time you have to make them are limited.

Obviously, the parallels in this phase are a little more unpleasant to consider, but since there is no Phase 4, there are some key issues you will want to take care of. For example, you will want to review your will and powers of attorney to make sure they are up to date and reflect your current wishes. Likewise with beneficiary designations on things like your life insurance policies and retirement accounts. Also, as your health changes, the desire to live next to the beach may give way to the desire to live closer to family or a good medical facility. Moving is always a major undertaking, so talk with family and do as much planning as possible while you’re healthy. 

As you can see, retirement is more than just a date on the calendar. By planning for each major phase, you can have peace of mind and focus on living a rich, rewarding life no matter how many pieces you have left on the board.

FPA member Joseph R. Hearn is a Vice President at Teckmeyer Financial Services, LLC and author of If Something Happens to Me.