As we (DW and I) grow older, (77th year) we're finding that our philosophy is changing, with regard to what we hope for out of our lives. I'd like to share this with you, with the understanding that it's our thinking alone... and not meant to influence the feelings or plans of others.
Part of the thinking come from our own situation, but part also comes from observing and dealing with friends and neighbors in our retirement communities in Illinois, and Florida.
So... one size does not fit all.
We retired at age 53... somewhere in the middle of the planned retirement ages of many who come here.
The idea of Tranching retirement planning comes from looking back to the "early years, phase 1"... for us, age 53 through 75... and now to what we'll call "phase two"... 75 to ? ? ?.
Phase 1... "Doing... the most active years".
Travel, social, physical, play years. The beach... the parties... the social groups... the meetings... the organizing and planning years... not just for our own lives, but being part of the community. A time for volunteering, for leading the way for others.
It was a time for accumulating and buying... boats, vacations, appliances, and those things we always wanted. A time to look around real well and to decide where we wanted to live.
In short, 20+ years of doing things that we wanted to do, and more importantly, having the health and desire to be active.
Phase 2... "Settling in for the long haul".
Not a real big change, like a nursing home or a wheel chair, but definitely less travel, bedtime at 9PM, and no partying 'til 2AM. Having a few brews, has changed to a 4pm martini. The parties require an afternoon nap, and are over for us by 10PM. The 30 mile bike rides are down to 5 or 10 miles, and the all day work projects have become a maximum of an hour or so.
Instead of the three "homes"... Camp at the Lake, Florida Mfg Home Senior Park and the Illinois Senior Retirement Community... phasing down to one permanent year round home.
The second part of this, is physical... no big problems, but the gradual onset of "old age" nuisances... prescription drugs for everything... BP, prostate, IBS, cholesterol, triglycerides, neuropathy, metabolic syndrome, arthritis, and those tiny "out of the norm" blood test levels. None of these serious r debilitating, but there.... "There" being where they weren't 3 to 5 years ago.
...............................................................
So What does this have to do with TRANCHING?
Here's what I see in a nutshell. Phase 1- Twenty +or- years of spending to the activity level, and
Phase 2 - Ten +or- years of a slower , less expensive life.
An arbitrary example of spending... excl. inflation
Phase 1 - $55,000/yr
Phase 2 - $40,000/yr
....................... or any other combination of numbers.
Why do this? In our case, had we planned for what we now see as reduced spending in our later years, we might have spent more in the early years. (doubt it)... More important, If we had thought this way in the beginning, we might have been able to retire earlier.
Thus the reason for the post.
........................
In a previous post, I mentioned our plan for our future living in our Continuing Care Retirement Community. This gives us a fixed cost of living within a budget that we can plan ahead. Lodging, Meals, entertainment, transportation and all utilities ad ancillary costs included in one payment. In fact, when we make the move into an apartment, we calculate that the income from the sale of our house (along with Social Security) should suffice for Phase 2... and continue to provide some estate dollars for our kids.
.......................
So what's different? Probably nothing except as a means for thinking about the later years as an entity apart, and different from the active years. In our case for the next 13 years, we'll need about $180,000 beyond our SS income... This will be covered by the sale of our current house.
In this case... Phase 2 equals the House.
The second benefit from this kind of planning is that you can put a finite date in any financial calculator. ie... the number of years in phase 1.
Whether using this approach or not, I would suggest that though your mileage may vary, understanding the difference between living style and expenses at age 57 through 77
and those at age 77 to 87 ,
will be quite significant..
And, at the VERY LEAST... considering the possibility that the final years of retirement may not be as active as the early years, will help in appreciating what you're doing today.
Part of the thinking come from our own situation, but part also comes from observing and dealing with friends and neighbors in our retirement communities in Illinois, and Florida.
So... one size does not fit all.
We retired at age 53... somewhere in the middle of the planned retirement ages of many who come here.
The idea of Tranching retirement planning comes from looking back to the "early years, phase 1"... for us, age 53 through 75... and now to what we'll call "phase two"... 75 to ? ? ?.
Phase 1... "Doing... the most active years".
Travel, social, physical, play years. The beach... the parties... the social groups... the meetings... the organizing and planning years... not just for our own lives, but being part of the community. A time for volunteering, for leading the way for others.
It was a time for accumulating and buying... boats, vacations, appliances, and those things we always wanted. A time to look around real well and to decide where we wanted to live.
In short, 20+ years of doing things that we wanted to do, and more importantly, having the health and desire to be active.
Phase 2... "Settling in for the long haul".
Not a real big change, like a nursing home or a wheel chair, but definitely less travel, bedtime at 9PM, and no partying 'til 2AM. Having a few brews, has changed to a 4pm martini. The parties require an afternoon nap, and are over for us by 10PM. The 30 mile bike rides are down to 5 or 10 miles, and the all day work projects have become a maximum of an hour or so.
Instead of the three "homes"... Camp at the Lake, Florida Mfg Home Senior Park and the Illinois Senior Retirement Community... phasing down to one permanent year round home.
The second part of this, is physical... no big problems, but the gradual onset of "old age" nuisances... prescription drugs for everything... BP, prostate, IBS, cholesterol, triglycerides, neuropathy, metabolic syndrome, arthritis, and those tiny "out of the norm" blood test levels. None of these serious r debilitating, but there.... "There" being where they weren't 3 to 5 years ago.
...............................................................
So What does this have to do with TRANCHING?
Here's what I see in a nutshell. Phase 1- Twenty +or- years of spending to the activity level, and
Phase 2 - Ten +or- years of a slower , less expensive life.
An arbitrary example of spending... excl. inflation
Phase 1 - $55,000/yr
Phase 2 - $40,000/yr
....................... or any other combination of numbers.
Why do this? In our case, had we planned for what we now see as reduced spending in our later years, we might have spent more in the early years. (doubt it)... More important, If we had thought this way in the beginning, we might have been able to retire earlier.
Thus the reason for the post.
........................
In a previous post, I mentioned our plan for our future living in our Continuing Care Retirement Community. This gives us a fixed cost of living within a budget that we can plan ahead. Lodging, Meals, entertainment, transportation and all utilities ad ancillary costs included in one payment. In fact, when we make the move into an apartment, we calculate that the income from the sale of our house (along with Social Security) should suffice for Phase 2... and continue to provide some estate dollars for our kids.
.......................
So what's different? Probably nothing except as a means for thinking about the later years as an entity apart, and different from the active years. In our case for the next 13 years, we'll need about $180,000 beyond our SS income... This will be covered by the sale of our current house.
In this case... Phase 2 equals the House.
The second benefit from this kind of planning is that you can put a finite date in any financial calculator. ie... the number of years in phase 1.
Whether using this approach or not, I would suggest that though your mileage may vary, understanding the difference between living style and expenses at age 57 through 77
and those at age 77 to 87 ,
will be quite significant..
And, at the VERY LEAST... considering the possibility that the final years of retirement may not be as active as the early years, will help in appreciating what you're doing today.
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