Retirement Expected to Occur in Phases

“UBS Investor Watch: 80 Is the New 60” found nine of 10 survey respondents expect retirement will be made up of at least three such phases, which UBS labeled as Transition, My Time and The Last Waltz. The length of the Transition phase is estimated by the survey at five to 10 years, taking place in a person’s 60s. The My Time and The Last Waltz phases are both estimated to be 10 to 15 years long and take place, respectively, in a person’s 70s and 80s.

With the Transition phase, most investors younger than age 65 do not expect to stop working completely once they hit 65, but they do picture working differently and redefining their priorities. Sixty percent plan to work in a similar career but reduce hours, switch careers/start their own businesses, or devote significant hours volunteering for philanthropic purposes. According to the survey, while the additional time spent working is partially out of necessity for some, for others it is a chance to rechannel their talents and energies into new challenges, or achieve a work/life balance where they still enjoy their work, but with more free time to pursue hobbies.

In the My Time phase, respondents said they expect to focus on increased travel and leisure activities. This is their chance to do all the things they always wanted but didn’t have the time, to tick off any items on their ‘bucket lists’ or spend more time on their favorite hobbies. Financial needs during this phase are said to be similar to the Transition phase, but with an even greater emphasis on cash flow/income stream, since they have no more work income and their spending is likely to increase.

As for The Last Waltz phase, respondents said they expect to slow down, live a simpler life and spend time reflecting on their life and legacy. This period involves less travel, with family more likely to come visit rather than the other way around. This phase is sometimes brought on by an accident (e.g., bad fall) or health scare (e.g., stroke), which prompts the person to decide to slow down, ending the My Time phase.

According to the survey, the expected emphasis on health issues in this phase raises concerns with workers, who may underestimate how much they may have to deal with, and spend on, health issues. Health care and long-term care are expected to be the primary financial needs during this phase.

For this survey, 2,319 U.S. investors were queried between September 24 and 30. Investors surveyed have at least $250,000 in investable assets and half have at least $1 million in investable assets. A report is here.