Using the right budgeting software not only helps you reach your retirement savings goals, it can also ensure you manage your money well through the three phases of retirement.

The Three Phases of Retirement

Like every other part of life, retirement is not a static state. Rather than planning on retirement as a single phase, Leonard Wright, Nevada-based CPA and a member of the AICPA’s Consumer Financial Education Advocates, recommends planning for these three phases, based on your health:

  • Active years: age of retirement to around age 75
  • Slow-go years: approximately from ages 75 to 85
  • Stationary years: approximately age 85 and up

“Each stage needs to be properly planned for prior to retirement,” Wright explains. “The planning for this process starts at age 55, even if you are planning on retiring after age 70. Fifty-five is close enough to retirement that it will allow you and your spouse to consider options that may unfold sooner rather than later.”

Tracking Bonds and CDs

As your savings grow and you increase your investments, managing them can become more difficult. Bonds, savings bonds and CDs, for example, each have their own maturity dates based on when you purchase them.

Using the Security List tool available in Quicken Deluxe, you can track all of your bonds, as well as stocks and mutual funds. As your retirement year approaches, you can easily see which bonds are coming due and how much they will have earned.

Analyzing Investments

When retirement is still many years away, a popular strategy is to maximize returns by having a higher percentage of your investments in high-growth stocks and mutual funds. The closer you get to retirement, you will likely want to move to less risky investments to prevent losing the gains that you’ve made in the early years.

The investment tools in Quicken Deluxe give you the ability to analyze your investment performance and see what the capital gains would be if you sold them. You can also research other investments and download stock quotes. By adding key securities to your Watch List, Quicken will alert you to any important news relating to your investments.

Budgeting and Taxes

Using a budget is important to ensure that you are saving as much as possible for retirement. But a budget is just as important once retirement begins, so you don’t over-spend your available funds.  

During the first active phase of retirement, you may want to spend more money on travel or hobbies while you are still relatively young. During the second and third phases, you’ll likely want to have additional funding beyond your base income to account for added medical bills and a probable increase in the cost of living. “A high percentage of those living past 85 require some form of assistance. Because women tend to live longer than men, women consume about 72 percent of this cost,” Wright notes.

Throughout these three phases, you won’t want to put yourself in a situation where you are forced to pay extra taxes at the expense of your financial security in later years. With Quicken’s Tax Planner and budgeting tools, you can run different scenarios to see how cashing out investments, on top of your pension and other income will affect your tax burden, so you’ll know how much fun you can afford to have long before you officially retire.

Regardless of when you expect to retire, it’s a good idea to keep open the option of an earlier retirement, according to Wright. He explains, “I can’t tell you how many people say, ‘my plans were to retire at age 65 and travel, but it just did not work out as planned.’”