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In the past, retirement was often referred to as one long stretch of time in which people planned for years of vacation and fun with the grandchildren, possibly with some long term care included. Well, times have certainly changed. Today, retirement basically has three phases that need to be carefully planned for. These phases are:

1. Early
2. Comfortable
3. Final

The early stage usually occurs during the first years of retirement. Many individuals have stopped working at an early age (some as early as their 50s) and are full of energy and enthusiasm. In this first phase, many retirees travel extensively and enjoy physical sports such as golf or tennis. They may continue to work on a part-time basis or serve on various boards of trustees for different organizations.

The second stage, comfortable, is basically the middle of the retirement cycle, when many individuals stay closer to home. They may be more tired and do not want the hassle or headaches associated with travel. They are still in relatively good health and often participate more in local events and choose less physically taxing hobbies.

The last years of retirement make up the final stage. This is when individuals may battle the physical and mental aspects of old age. In this final phase, retirees often move out of their homes into assisted care facilities or nursing homes. Medical expenses, including prescription drugs, take up a significant share of their monthly income.

It's important to address each of these phases with clients. Here are some important phases to consider when doing so:

• Realize that cash flow needs will be different for each stage of retirement. Expenses will generally be higher in the early and final stages due to travel and care costs, respectively.
  
  
• People are living longer. As a result, it is imperative to review other alternate investment choices such as annuities, charitable remainder trusts, and even reverse mortgages.
  
  
• Review the needs for long term care and other life insurance products that will help cover high medical costs and burial expenses in the final phase of retirement.
  
  
• Rebalance investment portfolios to reflect the various changing priorities and living matters associated with each stage. Make sure to adjust their portfolios accordingly based upon their changes, goals, needs and objectives.
  
  
• Constantly monitor cash distributions from their portfolios. We have experienced a volatile stock market over the last few years. As a result, many portfolios have inconsistent returns that can lead to confusion about distributions from portfolios. In the past, an 8 percent distribution rate might have been acceptable. However, with today's low interest rates, it is imperative to make sure that the withdrawal rates are reasonable over the long-term.

Now, more than ever, a retired investor needs a plan. Remember, the only thing that's constant is change. Be sure to roll with these changes and assist your clients through these times when they need you the most. By discussing these three phases with your clients and working with them through each one, you will earn your keep as their trusted advisor.

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