| Our health and activity level passes through 3 phases | | | | location - your expense may be roughly the same. |
| during retirement. And that'll alter our living options | | | | But if you're willing to decide what's really important |
| and expenses. By recognizing this, you can modify | | | | to you - and stop paying for what isn't - then you |
| your living expenses now to suit your wishes and | | | | can drastically reduce your Basics and Entertainment |
| happiness. I'll outline these phases and the actions you | | | | in a variety of ways. |
| can take to optimize your lifestyle choices by | | | | Examples include lowering your housing costs by |
| minimizing your expenses. | | | | buying down, taking on a renter; selling your car for a |
| The 3 phases of retirement are: | | | | cheaper version; moving to a cheaper region of the |
| 1) Healthy, Active and Independent Stage: Usually | | | | country; or moving offshore for further reducing |
| you begin your retirement in this phase. Your activity | | | | expenses. I offer ideas at my website. |
| and lifestyle choice determines your expense level - | | | | Choose Your Lifestyle and Act On It: |
| and the associated income you need. Choosing a | | | | Of course, you should lower your expenses but keep |
| satisfying lifestyle with little expense may be best for | | | | them compatible to the kind of lifestyle you'd find |
| you. This stage can last as long as your money and | | | | fulfilling. But you've got to think about what that is |
| health hold out. | | | | and act upon it. Perhaps follow your heart or dream. |
| 2) Minor Health Problems with Slowdown and Almost | | | | Happiness often accompanies a meaningful purpose |
| Independent Stage: You're still living independently but | | | | to living. |
| running into minor health issues. Hopefully you're doing | | | | Enjoyable and fulfilling examples may include living |
| what you want but are just slowing down. This stage | | | | peaceably in a low income country, painting or writing |
| may present the lowest expenses - i.e. the least | | | | as you always wanted to do, working as a volunteer |
| demand for income. Hopefully, this is the last stage | | | | or doing low paying charity work. Hopefully, such |
| for many - no matter how long they live. | | | | avocations will increase your zest for life - and |
| 3) Infirmed and Dependent Stage: Eventually, the full | | | | maintain your health and activity phase longer. But it |
| effects of 'old age' will infirm many retirees. Three | | | | won't happen unless you make it happen. |
| out of four1 future retirees will require long term care | | | | So don't procrastinate and prepare yourself for |
| in their homes and nursing homes. Costs2 can be | | | | action: |
| substantial - rising to as much as $80,000 per year | | | | 1) Decide what lifestyle will bring you fulfillment and |
| for nursing home care in the U.S. | | | | joy in your 'retirement' |
| You can control the expenses of the first two | | | | 2) Search out all the ways you can modify your |
| stages by optimizing your lifestyle and activity | | | | expenses so your income can support your lifestyle |
| choices. That way you'll know what retirement | | | | of choice. |
| income you really need. And that can be far less than | | | | Reducing unnecessary expenses may free up future |
| you think for a lifestyle you choose. | | | | income to pay for assistance and healthcare costs |
| Recognizing the inevitability of our health's | | | | you develop in phase 2. Living offshore in a low |
| progression will get you to take the action now to | | | | income country often presents very inexpensive |
| choose a lifestyle you'll like and can afford. | | | | hired help for you as you get older. |
| Group your expenses into 3 categories: | | | | And what if you succumb to the dependency and |
| 1. The Basics: Housing, transportation, and meals | | | | afflictions of phase 3? |
| 2. Entertainment | | | | If you have about $1m or more, your investment |
| 3. Healthcare | | | | earnings can cover your care so you can leave a |
| Throughout your first two phases, The Basics stay | | | | legacy to your children. With less wealth, you could |
| roughly the same, while entertainment decreases | | | | purchase long term care insurance to protect |
| with decreased health and activity levels. Healthcare | | | | whatever wealth you do have from going all to your |
| expenses trend slowly up but can dominate | | | | long term care costs. |
| expenses in phase 3 especially if you need to go into | | | | If you've given your wealth away and are broke, |
| a nursing home. | | | | Medicaid will pick up the tab. So you needn't worry |
| You can modify the expense for your Basics and | | | | about money. |
| Entertainment by choosing a lifestyle that maximizes | | | | Above all, don't live your life for phase 3 - live it for |
| your enjoyment but minimizes expenses. If you | | | | phase 1. |
| maintain living as when working - same house and | | | | |