Retirement Benefits

Learn the 4 Phases of Retirement

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It’s easy to think of retirement in simple terms of “before and after.” One day you’re working and the next day you’re not. But experts suggest we think of retirement more expansively, in a phased approach—especially when it comes to financial planning.

In fact, there are generally four distinct phases around retirement: pre-retirement, early retirement, mid-retirement, and late retirement. Although not universal to every individual, these phases may help you envision your financial planning and lifestyle needs more thoroughly.

1. Pre-Retirement (Ages 50-62)

Pre-retirement generally refers to the 10 years or so before you actually plan to retire. In this time period, you’ll have a clearer picture of the total savings or income streams available to you after retirement.

This is the time to seriously assess your financial position by checking the balances in your supplemental savings plans, such as 401(k) or 457 plans, and other investments, and get an estimate of your lifetime monthly CalPERS retirement benefits by using the Retirement Estimate Calculator in myCalPERS.

Finally, Investopedia marks 62 as the unofficial end of the pre-retirement period and the age some people can begin to draw on Social Security benefits, but there are financial advantages to waiting until later to collect Social Security, if you qualify. If you are born in 1960 or later, full benefits are not available until age 67. For more information, contact Social Security.

Compare these income sources to your current spending and other debts. If you’re concerned about making ends meet, now’s the time to tighten spending and create additional savings and income strategies.

2. Early Retirement (Ages 62-70)

Just like any big change, when you first retire and your income sources shift, expect a period of adjustment. Some new retirees even spend more than they expected during the first few years after retirement.

If eligible, retirees may begin to collect Social Security benefits in addition to their CalPERS pension. Age 65-67 is the age range at which you can begin receiving the full Social Security benefit you’re eligible for.

If your employer contracts with CalPERS for health benefits, you may elect to enroll in or continue health coverage upon retirement. Then a few months before you turn 65, CalPERS will notify you of the requirements to continue your health coverage based on your Medicare eligibility.

If you’re still concerned about your income and savings, or just want to get back into the workplace, many younger retirees consider returning to work either part-time or full-time.

3. Mid-Retirement (Ages 70-80)

At this point in your retirement, your expenses may decrease. You may be traveling less or have fewer dependents relying on you for financial support. You may have downsized or moved to a lower-cost area.

On the other hand, the cost of living changes every year with inflation. CalPERS retirees rely on an annual Cost-of-Living Adjustment (COLA), a benefit to ensure your value of money at retirement keeps up with the rate of inflation.

Middle retirement is a good time to revisit your will and estate plan. Consider naming someone your financial power of attorney to execute your wishes should you become unable to act on your own behalf. Don’t forget to designate a CalPERS Special Power of Attorney, an agent to conduct your retirement affairs.

4. Late Retirement (Ages 80+)

Increased costs in later retirement generally revolve around health care. CalPERS Medicare plans cover many costs, but you may still need to plan for copayments and coinsurance. You may also need to plan for home health services, a move to an assisted living facility, or other long-term care support. Know what services Medicare and your health plan do and don’t cover.

Benefits payable upon the death of a retired CalPERS member depend on a variety of factors. It’s not possible to know exactly what is payable until we review each specific case. Contact us to request the exact benefits and amounts payable.

Checklist: Planning Your Financial Future

Creating a plan to ensure you’re financially secure can be a challenging process, but we’re here to help. Use this checklist as a guide to help you start planning your financial future today.

Our Planning Your Financial Future video series can also help you prepare for retirement.

Work With a Financial Adviser

There’s no wrong time to seek professional guidance for your specific financial situation. Do your research to find a financial adviser you trust. Make sure the adviser is a fiduciary, meaning they are legally bound to act in your best interest. Talk with them about your financial goals and set up steps to achieve them.

If you have questions or concerns about your investment accounts, consider contacting the Financial Industry Regulatory Authority (FINRA), a not-for-profit organization that helps ensure the integrity of the U.S. financial system and educates investors.