Planning for the 4 Phases of Retirement: Pre-Retirement

For you and for future generations, retirement is a much different animal than it was for your grandparents. Perhaps the biggest difference is that retirement can now last for several decades. But no matter the length of your retirement, you’re likely to go through at least 4 distinct phases. As you get closer to the big day, you’re going to want to start thinking about those phases, how each may be different, and how well prepared you are for the changes that will continue to come into your life once you’ve hung up the white coat. Here, we’ll present some key considerations for those in each phase, in three parts.

Phase 1: Pre-retirement

Some sites refer to this also as “peri-retirement,” but regardless of the nomenclature, this is the stage right before you retire, when your retirement date is getting very close. You’re still working, but you’re starting to get the itch, and you know retirement is right around the corner. This is the time when many retirement savers start to have a great deal of anxiety about how much they’ve put away, how much income they’ll generate from the sale of their practice, and how they’ll adjust to a life away from dentistry.

Key considerations:

• Maximize what you’re putting away. You are likely near your peak in career earnings, and with the finish line in sight, now is the time to really sock it away. This is particularly true if you got off to a late start.
• Estimate what you expect to receive from Social Security and your retirement plans. Long-term planning with Social Security can be difficult until you reach pre-retirement, because your income from your Uncle Sam is highly based on at what age you retire and the solvency of the federal program. In this phase, you’ll have more of those details. You’ll also know that the current balances in any 401(k) or other retirement plans are close to what they’ll be when you stop earning. Now is a great time to do some math.
• Evaluate your expenses for cutbacks and unexpected costs. If you’re concerned about income lasting throughout your retirement, while you’re still earning is the right time to consider cutting back on some expenses that you may longer need. Also, the time window for unanticipated costs is now starting to shorten, making the threat less distinct.
• Think about what you want to do and where you want to be. It’s hard for many dentists to even picture having long days of free time stretching ahead, so you’ll want to spend some time envisioning what you really want out of retired life. Throughout most of your career, your location has probably been at least partly determined by your practice. Dentists, as a general rule, grow roots and keep them in place for a long period of time. But after you retire, you can certainly consider a very different location. The years of pre-retirement may afford you the opportunity to travel to some places that may prove to be a landing spot for you.

In part 2, we’ll look at early retirement, and in the last part, we’ll tackle middle and late retirement.