Most of us plan for retirement as one long stretch of time. Save enough, spend carefully, and hope it lasts. But here is the thing: your spending needs in your late sixties look nothing like your spending needs in your eighties. A smarter approach breaks retirement into three distinct phases and plans a separate budget for each.
Financial planners sometimes call them the Go-Go years, the Slow-Go years, and the No-Go years. Each one has its own rhythm, its own costs, and its own priorities.
Phase One: The Go-Go Years (Roughly Ages 65–74)
This is your most active stretch of retirement. You’re healthier, more mobile, and ready to make things happen. Maybe that means finally booking the trip to Europe. Maybe it means selling the family home and heading somewhere new. Maybe it’s just knocking items off a bucket list you’ve been adding to for years.
This phase is naturally the most expensive of your retirement. Kiplinger says it’s perfectly fine to give yourself permission to spend a little more right now. A trip at 66 and a trip at 74 are two very different experiences. Do the bigger adventures while you can enjoy them fully.
Your budget for this phase should draw a bit more from your savings to cover those adventures. That’s not reckless, that’s planning.
Phase Two: The Slow-Go Years (Roughly Ages 75–84)
Things shift a little here. You’re still going, maybe a cruise at 75 sounds wonderful, but the pace changes. Travel and adventure spending tends to go down. Medical costs tend to go up.
The Global Association of Independent Advisors describes this phase as a time to savor. That’s a good way to think about it. You’re not stopping. You’re refocusing.
On the financial side, healthcare costs deserve real attention. According to WealthVieu, planning for a 5 to 6 percent annual increase in healthcare costs is wise. A $500-a-month healthcare budget today could grow to $800 a month down the road. That gap needs to be in your plan.
Phase Three: The No-Go Years (Ages 85 and Up)
Long-term care becomes the main focus in this phase. The out-of-pocket costs for an average couple on Medicare can run anywhere from $165,000 to $315,000 over the course of retirement and that’s for expenses Medicare doesn’t cover.
The best thing you can do right now, while you’re still in the earlier phases, is to stay on top of your health. The better you take care of yourself today, the clearer a picture you’ll have of what kind of care you might need later.
How To Put This Into Practice
Think of your retirement savings as having three buckets rather than one. The first is for adventures and active living in your Go-Go years. The second splits between fun spending and rising healthcare costs during your Slow-Go years. The third is reserved for comfort and long-term care.
A financial advisor can help you look decades ahead and build projections for insurance premiums, Medicare coverage, and out-of-pocket costs. That kind of planning takes the guesswork out of a very long road.
You can’t know exactly what’s coming. But splitting your retirement budget into phases means you won’t shortchange yourself in the fun years and you won’t be caught off guard in the later ones.