Life After Full-time Work Blog

Learn about preparing for life after full-time work through posts from Don's upcoming book.

#22: Financial Stages In Planning For Life After Full-Time Work

Are there any guideposts as to what you should be doing and what you should be thinking about, at different stages in your financial life? Let’s look at minimum, successful and exceptional standards at five stages.


We go through stages in our lives. Sometimes it’s useful to look at how our psychology changes as we move from one stage to another. I’ll do that periodically, as I write about Topic #1. In this post I’m going to show that there are financial stages too.

I don’t have numerical benchmarks that you should compare yourself against. Individual circumstances vary too much for standardized benchmarks. It doesn’t matter whether you’re ahead or behind anyone else, let alone some fictitious benchmark person.

Instead, I’ll give you three very rough action criteria at each stage. One will be the minimum, one will represent success, and one will be exceptional. As you get nearer retirement, the criteria stay the same, but their interpretation changes. What was exceptional in the previous stage now simply represents success, and what represented success now becomes the minimum. But don’t take them as rigid guidelines – they’re meant as hints to you.

And don’t take the dates mentioned in defining the stages too rigidly either. Again, they’re hints. We’re all different.

Stage 1: The family and career years (up to perhaps 20 years before planned retirement)

The start of your paid working career is a natural starting point for looking at retirement finances. It’s hardly a priority, though. Typical priorities at this stage relate to family and career. From a personal perspective you’ll want to establish a residential pattern, whether renting or purchasing; keep fit; enjoy life, involving leisure, family and friends.

Nevertheless, minimum retirement-related action steps in this phase are to register for an employment or personal retirement savings plan, undertake to make the minimum contributions permissible, and register for some form of default investment glide path. (I’ll explain glide paths in future posts.) In other words, get started early.

Success at this stage involves saving as much as is necessary to get the maximum “free” match from your employer (if that’s the way the plan works), and committing to increases in your contribution rate every time your pay increases.

This isn’t easy. You have so many other financial priorities. And you may also be saving indirectly for retirement anyway, via paying down a mortgage, as I mentioned in Post #21.

What’s exceptional? Getting into a post-retirement income mindset by doing personal funded ratio calculations (more about these in future posts, obviously), and getting to know enough about your Pillar 1 pension to include it in your projections. Yes, this would really be exceptional. In the early years of work it’s completely natural to think solely in terms of accumulating wealth towards retirement. Changing from a wealth mindset to an income mindset typically comes much later.

Stage 2: Consolidating the financial base (perhaps 20 to 5 years before planned retirement)

Now you’re in the peak earnings phase of your career, and this is when you make the financial transition from paying off debts to accumulating wealth (even though your children’s education may make a big claim on your resources). The thing is, if it isn’t now, it may be never.

Your social life is still important, as is keeping fit. If you have time (!), this is when you are very valuable as a mentor to young people, because of the experience you have gained.

Being in a retirement savings plan with the maximum free match, with increases in your contribution as your pay increases – these are now the minimum requirements if you want any chance of giving yourself the gift of retirement.

Success? Getting into an income mindset is the only way to identify what you need to do between now and your planned retirement date. Included in what you need to do is a consideration of when you’ll move away from the default investment glide path and customize one for yourself.

Exceptional? That’s when you’re in control of an integrated plan for paying off debt (mortgage and credit cards), financing your children’s education and saving toward retirement.

Stage 3: Getting to maturity (perhaps the 5 years approaching retirement)

Now it’s not just a financial priority, it becomes a life priority to establish a plan for graduating from full-time work. And remember that there are two parts to the plan, financial and psychological, identifying the lifestyle you’re going to, not just the lifestyle you’re going from.

As always, your social activities and keeping fit are important. Start to identify the experiences that satisfy you and make you happy; explore ways in which you might give something back to society.

At this stage the income mindset and maximizing retirement savings are the minimum financial requirement. It’s also time to understand investment risk and set forth on your investment path to retirement, including a customized glide path. And of course Pillar 1 starts to feel like a reality now.

Success? That comes from the mortgage and credit card debt gone, your children’s education paid for, your being on target for your retirement financial goal without having to increase contributions. And you’re starting to understand longevity (yours alone, plus the combined longevity of you and your partner). And you’re considering what to do about post-retirement healthcare and long-term care.

What’s exceptional? You’re ready to start considering your legacy to your children, or even starting to make it available to them in small amounts now. You’re making arrangements for a part-time post-graduate career. You’re searching for, or may even have found, a financial professional.

Stage 4: Transition (perhaps the first 3 years of getting into a retirement lifestyle)

Now the priority is to make the transition from full-time work happily, remembering that it’s psychologically a new world, and even if you thought you knew what you’d enjoy doing, reality is often different. This is normal, not something to be surprised by or disappointed about.

As always, keep fit. Expand the scope of those social activities that create shared experiences, because typically those are the ones that make you happiest. Experiment with many activities and be honest about what really does satisfy you and make you happy.

The minimum toward retirement finances is now to have registered for your Pillar 1 pension (regardless of when you elect to start drawing it) and for whatever post-retirement healthcare plan you need. Make a decision about long-term care, if you didn’t in the previous stage. Find a financial professional. Reassess your financial position (including your personal funded ratio) annually, with your spending pattern starting to establish itself. Make a decision about how you’ll deal with longevity risk.

Yes, all of that is the minimum. If not now, when? After all, you’re now already retired, at least partially.

Success comes from everything now being on track, with your estate plans established.

Exceptional? The psychological adjustment is complete – for both you and your partner.

Stage 5: Planning to downsize your lifestyle (perhaps around age 75 or a little later)

Downsizing your lifestyle is a typical phase, and typically it occurs naturally. Getting your financial affairs to match your downsized lifestyle is something that needs to be done consciously. In particular, all financial aspects should now be routine, because that defines your lifestyle too: routine and low-risk.

I have no criteria for you, at this stage. I simply wish you much happiness!



Think of five stages in your financial life: the first goes up to 20 years before retirement, then the period taking you to 5 years before retirement, then the 5 years taking you to retirement, then the transition into a retirement lifestyle, and finally the point at which you downsize your lifestyle well into retirement. There are different levels of preparedness that I identify for each stage.

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I have written about retirement planning before and some of that material also relates to topics or issues that are being discussed here. Where relevant I draw on material from three sources: The Retirement Plan Solution (co-authored with Bob Collie and Matt Smith, published by John Wiley & Sons, Inc., 2009), my foreword to Someday Rich (by Timothy Noonan and Matt Smith, also published by Wiley, 2012), and my occasional column The Art of Investment in the FT Money supplement of The Financial Times, published in the UK. I am grateful to the other authors and to The Financial Times for permission to use the material here.

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