Managing your nest egg isn’t a one-time event. It’s an ongoing process that needs to reflect life’s changes throughout retirement.

Many people look forward to retirement with a mix of pride, anticipation and maybe even a little worry. After all, retirement comes with some very real concerns that include the potential for higher expenses, increased healthcare costs, and managing your  savings to last for 10, 20 or 30+ years .

Understanding how expenses could evolve over the course of your retirement can help you plan for your long-term needs. To put these concerns in context, consider retirement as a series of phases.

Phase 1 - Early retirement from the 60s to mid-70s

Phase 2 - Mid-retirement from the mid-70s to early/mid-80s

Phase 3 - Late retirement from the mid-80s to the end of your life

To build the retirement you deserve, each phase requires its own financial strategy.

Early retirement

In early retirement, most people are free to explore their passions, try new hobbies, travel and indulge in areas that they previously didn’t have time for. Many may also find themselves helping to support adult children, assisting elderly parents or contributing to a grandchild’s education.

It comes as no surprise that many people find this time to be the most expensive stage of their retirement. They’re caught between wanting to enjoy their newfound freedoms and needing to ensure they don’t burn through their savings. Balancing the need for investment growth with guaranteed income is critical during this stage.

Middle retirement

About 10 to 15 years into retirement, retirees tend to settle into their new lives and some consider downsizing their house or going to a single car. For others, this is the time to move closer to friends and family or choose a retirement community. Healthcare spending begins to increase, so it’s important to consider additional expenses for health or mobility.

Late retirement

When late-retirement arrives, the situation changes yet again. Many retirees in this stage enjoy sticking closer to home, so the travel portion of the budget declines. Healthcare issues move to the front burner, and they can get expensive. This is why planning for long-term care expenses is an important part of retirement planning. Many also consider setting up a power of attorney with a trusted financial professional, attorney or family member who can make financial decisions on their behalf if they are unable to do so. If you haven’t done this yet or need to revise your plan, consult with your attorney or financial professional.

Managing income

There’s a common theme running through these stages – balancing income with expenses. Throughout retirement, income will likely derive from three sources:

• A pension or pension-like income
• Social Security
• Income from investments

As income needs and the market environment shift, retirees need to ensure the income and growth components to their retirement income plan continue to function as expected when they created the plan with their financial professional. Social Security and other guaranteed income will remain stable throughout retirement, but at each stage it’s beneficial for retirees to assess  their investments to make sure their income strategy is in line with their projected expenses and guaranteed income options.

While retirees need a growth component to their investments, the need for guaranteed income is important as well. A sudden change in the market can wipe out savings and impact a retiree’s ability to meet their income needs. This is where a source of guaranteed income or pension-like income can help a retiree meet financial obligations regardless of how the market is performing.

Partner with a trusted financial professional

There are predictable events at most stages of retirement, which financial professionals experienced in retirement income distribution can help anticipate. Such an individual can help build an income strategy that offers additional sources of guaranteed income. 

A financial professional can also review a retiree’s retirement portfolio and make suggestions to ensure their income strategy covers at least essential expenses throughout retirement. 

However you decide to spend your retirement, the key is to keep a pulse on your anticipated expenses and income so that you’re prepared for all the changes that come with a rewarding retirement.