Go-Go, Slow-Go, No-Go
Financial planner discusses the three phases of retirement
By Deborah Jeanne Sergeant
The three phases of retirement — go-go, slow-go and no-go — represent Michael Stein’s vision for how money is spent as depicted in his book “The Prosperous Retirement.”
“I certainly see the go-go, slow-go and no-go years play out with many of my clients,” said Leyla Morgillo, certified financial planner with Madison Financial Planning Group in Syracuse.
In the “go-go” years, about the first 10 years, retirees are relishing their newfound freedom from work. They’re enjoying travel, engaging in hobbies and perhaps buying a few high-ticket such as a classic car, RV or lakeside cottage for their leisure time.
“They recognize that they need to take advantage of the time when they are younger and healthy to travel and do things that they may not be able to do as they age,” Morgillo said.
It’s a heady time of life, as it’s likely their children have grown and flown. Their nest egg is sizable and they’re ready to have some fun. But spending too much during these early retirement years can endanger the later phases of retirement, so retirees should still stay on budget while still enjoying life.
Retirees may find that they’re spending at a rate that’s a little higher than while they were earning. However, typically this balances out in the next phase.
The slow-go years are when retirees settle into a rhythm and turn more inward. They may not travel as much. Perhaps their adult children are now having children. Their new roles as Grandma and Grandpa draw them homeward as they provide childcare and enjoy local outings with the little ones.
They may also realize they want to engage in volunteering in their community to find more fulfillment as the novelty of travel and amusement has worn thin. Some retirees begin to feel the effects of aging and have to slow down. Retirees are getting out less in this phase and thus spending less as their leisure activities are not as spending—oriented. In general, expenses slow down by about 2% annually during these years.
In the third phase, no-go, retirees usually minimize their most expensive interests such as travel as they focus on maintaining independence. Sometimes, their health issues curtail their travel and hobbies. Usually, this is in the late 70s to early 80s. While leisure expenses are going down, healthcare expenses are starting to increase overall. Their budget will expand to meet those expenses. Prescription drugs, assisted living care, homecare and long-term care expenses are all very costly and typically all rise the older one becomes.
They may also choose to modify their homes to age in place, which can be costly in the short-term, but better ensure they can remain in their homes longer. The average cost of home renovations to age in place is around $9,500 for things like a walk-in tub and non-skid flooring. Features such as a completely accessible bathroom or stair lift can cost up to $50,000.
3 Phases of Retirement at a Glance
Go-Go Years
Characterized by high energy and a desire to travel, pursue hobbies, and enjoy leisure time immediately following retirement. This phase often involves the highest discretionary spending.
Slow-Go Years
A transition period where physical activity begins to decrease. Travel may become more local or less frequent, and retirees may shift toward less strenuous activities.
No-Go Years
Marked by a significant reduction in physical mobility and, often, a shift in spending from luxury items to health-related services. This phase focuses on safety, comfort, and, in many cases, necessary medical care.
Source: Commonwealth Financial Services.