The 3 phases of retirement you need to plan for
Written and accurate as at: Feb 11, 2026 Current Stats & Facts
When we think about retirement, we usually imagine the overseas trips, long lunches and guilt-free naps. After decades of work and responsibility, we can finally spend our days doing the things that could once only be squeezed into holidays and weekends.
But retirement tends to happen in phases, and each phase places very different demands on our time, energy and finances. Understanding them upfront can put you in a much stronger position to enjoy the early years without compromising the later ones.
The active years (60 to 70)
The active years are when your health is generally good, your energy levels are still high, and there’s a backlog of interests and hobbies waiting to be explored. Travel, classes, volunteering – your to-do list will fill quickly.
But what often surprises retirees during this phase is how much money they’re spending. The costs associated with working life and supporting a family may have fallen away, but they’re quickly replaced by spending on experiences (not to mention new cars and long overdue renovations).
The main risk here is parting with too much money too quickly. The early retirement years are known as the go-go years for a reason, but you’ll need to strike a balance between making memories and preserving your savings. While the more lavish expenses will taper off over time, others – like council rates, utilities and insurance – will continue regardless of how active you are.
A few things that might help in this phase include:
- Making sure you have a clear retirement spending plan that factors in inflation
- Maintaining a cash buffer to fund irregular or one-off expenses
- Checking your eligibility for the Age Pension as you approach 67.
The sedentary years (70 to 80)
This phase tends to herald the quieter part of your golden years. Regular outings become less appealing, doctor’s appointments become more common, and – wonderful as they might be – visits from your grandkids might demand an extra rest day or two for recovery.
As the pace of life slows, we tend to see less spending on big ticket items and more on day-to-day living and hobbies of the more relaxing, if not sedentary, kind. It’s also around this time that healthcare costs start to rise.
So while this phase might not be as eventful as the first and last stages, it marks an important inflection point as far as your finances are concerned. Some things to consider include:
- Ensuring your income streams are simple, reliable and easy to manage
- Deciding whether to downsize your home
- Planning for higher healthcare costs without assuming they’ll be covered entirely by Medicare
- Making sure your will, super beneficiaries and powers of attorney are up to date.
The frail years (80+)
The final phase of retirement is the one furthest from people’s minds throughout their working years, but it’s often the most expensive and least flexible.
It’s during this phase that health issues become more pressing and daily tasks start to require assistance. Some people remain at home with support – whether it’s family, carers or mobility-friendly home modifications – while others move into aged care facilities.
Whatever you choose, there’s still a lot of uncertainty around long-term costs. While average life expectancy statistics can provide a rough benchmark to help you plan, they can’t be treated as predictions. You might have to fund your lifestyle for another decade or two beyond what you might initially expect.
Preparing for this phase involves:
- Understanding how aged care funding works and how your income and assets may be assessed
- Reviewing your super, savings and investments to make sure they can support you long-term
- Staying vigilant for scams and financial abuse, which older Australians often fall victim to.
Planning across all three phases
The most effective retirement plans consider all three phases from the very beginning. Focusing just the early years can leave you struggling later on, when your options have narrowed and money is in shorter supply.
This doesn’t mean predicting every expense or living frugally for decades. But you should recognise that retirement is a long-term journey that requires you to evolve with it.
If you can remain flexible and open to adjusting your spending, lifestyle and priorities as each phase unfolds, you’ll be better placed to enjoy the full spectrum of retirement, from the lively years to the quieter, more dependent ones.