Go-Go, Slow-Go, No-Go: The Three Retirements You Will Live Through, and the One Nobody Plans For

By: J. Barry Watts, Expert Tax Strategist and Retirement Designer

For as long as I can remember, we have described retirement as the golden years. It is a lovely phrase. It is also, for a surprising number of people, wrong. If you do not manage retirement properly, the golden years have a way of becoming the rusty, dusty years, and that is not what any of us had in mind when we handed in the badge.

A generation ago you could get away with thinking of retirement as one long block of time, largely because it did not last very long. That is no longer true. Today retirement runs thirty, thirty-five, sometimes forty years, and it arrives in three distinct phases, each with its own opportunities and its own set of risks. Plan for one and ignore the other two and you will eventually find out which one you skipped. Conveniently, they rhyme: the go-go years, the slow-go years, and the no-go years.

Phase One: The Go-Go Years

Think of the go-go years as the first ten to fifteen years of retirement, roughly age sixty-five to seventy-five or seventy-seven. These are the fun years. You are active, you feel good, you are fit and you are energetic, and you are finally working your way down the bucket list you have been adding to for thirty years. There is usually a good deal of travel in this phase, and there are grandchildren, which for most people is the whole point.

These days a remarkable number of folks spend the go-go years playing pickleball, and I am not exaggerating about how seriously they take it. We have a client in our practice who is a national pickleball champion in one bracket or another.

Here is the planning point, and it is the one people miss: the go-go years are almost always the most expensive phase of retirement. The paddles run a hundred fifty dollars. The trips add up. The going itself costs money, and everything you buy along the way costs more than it used to. I was reading an article recently about how much the price of a McDonald’s Happy Meal has climbed since the year 2000, and the number was startling. That is the quiet pressure behind this whole phase. You are spending the most in the exact years when inflation has had the longest run at your dollars. The go-go years need a plan that funds the fun without quietly draining the account that has to carry you another twenty-five years.

Phase Two: The Slow-Go Years

Somewhere in the late seventies and into the eighties, most of our clients begin to slow down. Some slow down gradually, some severely. They travel less. They play a considerably slower game of pickleball. That is why we call these the slow-go years.

What changes in this phase is not just the pace, it is the nature of the worry. Medical expenses start to dominate the conversation, and the fear of running out of money becomes strong enough that people stop spending. I see this constantly: retirees who have the money, who have earned the right to enjoy it, and who will not touch it because nobody has ever shown them the math.

There are two kinds of medical expenses coming in these years. The first is Medicare itself. People are sometimes surprised to learn that Medicare costs money when you go on it at sixty-five, and that you pay for your supplements on top of it. The second is long-term care, and that is the one with real teeth. Care here in the 417 can run in the neighborhood of seven to ten thousand dollars a month, and that figure has climbed every year I have been doing this, so treat it as a moving target and price it for the year you are actually planning.

What we do at WealthCare Retirement Solutions is allocate a portion of your income every year to carry those Medicare and long-term care costs, so the money is already accounted for before the bill arrives. That is what a well-designed retirement income plan is for. It shines a light on the path in front of you so you can walk into the slow-go years with confidence instead of fear.

Phase Three: The No-Go Years

The no-go years kick in somewhere around eighty or eighty-five. These are the years when, as the saying goes, your get-up-and-go has gotten up and gone, and sometimes you cannot find it afterward.

Although not always. I have a client here in Springfield, a retired physician, who is ninety-seven years old. He astonishes me every single time. He drives himself to my office and walks in vibrant, robust and entirely alive. So this last phase can run ten or fifteen years and still be a vital stretch of life. You have to take care of yourself, but it is far from a foregone conclusion that these years are empty ones.

Which is exactly why we plan every client to age one hundred. No, not everybody is going to make it to a hundred. That is not the point. The point is that if you plan to eighty-five and live to ninety-two, you know what you have to say at that point? Would you like fries with that? And that is not how anybody wants to finish.

The risks in this phase are specific. Running out of money and having to fall back on whatever Social Security and a pension will pay is the big one. Medical expense grows again. You start paying people to do things you have always done yourself, like mowing the yard and keeping up the house. And there is a question most families never discuss until it is urgent: where are you going to live in relation to the rest of your family? If your children are going to be checking in on you and helping care for you, it matters a great deal whether they are fifteen minutes away or six hours away. Relocating is a real part of planning for this phase, and it goes far better when it is a decision rather than a reaction.

The Story I Tell Every Client Who Has Not Checked Their Beneficiaries

By the no-go years your estate plan needs to be in order, and the single most overlooked piece of it is the beneficiary designation. You should be going through the beneficiaries on every account with your financial advisor at least once a year, confirming that each account is pointed at the person you actually intend it to go to.

Here is why I am so insistent about it. I knew a man who spent his entire career with one company. He divorced early in life, remarried later, had children, and was married to his second wife for more than forty years. When he died, the family discovered he had never updated the beneficiary on his 401(k). The woman he divorced in his twenties received all of his retirement money. The wife he had loved for four decades received none of it.

That outcome was not caused by a bad plan. It was caused by a form nobody looked at for forty years.

Estate and Legacy Planning Starts Far Earlier Than You Think

People tend to file estate planning under end-of-life business, something to get to eventually. I would push back on that. I wrote my first will in my twenties, and my wife and I had trusts in place in our thirties. If you have assets that need to reach the right people, and particularly if you have children and you want a say in what happens to them should you die prematurely, then it is already time. It is never too early to begin your estate and legacy planning.

What you need is a set of documents that holds up: wills, trusts, and powers of attorney for both healthcare and financial matters. Make certain those powers of attorney are durable, which means they survive whatever happens to you. One that is not durable can lose its force at precisely the moment your family needs it most.

You also want your estate arranged so that it avoids probate. Probate commonly runs eighteen to twenty-four months and costs in the neighborhood of five percent of the estate, which on a million dollars is roughly fifty thousand gone. Both the timeline and the cost vary by state and by situation, so ask about yours specifically. What I can tell you is that a great deal of it is unnecessary. People go through probate because nobody ever told them there were ways around it.

As you approach the no-go years, the planning turns toward the conversations most families avoid. What do you want at the end of life? Do you want heroic measures taken to preserve your life, or when the time comes, do you want to be let go? How much machinery do you want around you? Do you need a do-not-resuscitate order? At what point do you want the physicians told that it is acceptable to turn off the pacemaker, because that is a decision someone will have to make.

Then there is the part that has nothing to do with medicine. What do you want in the way of final services? Anything at all, or nothing? Who do you want to speak? How do you want to be remembered? We ask our clients that last one often, and most of them shrug. It is worth considering, and it is a tremendous gift to the family who would otherwise have to guess.

We hope your final years are thirty or forty deep. Those years are what we focus on first, making sure they are fully funded and that you have the money to live the life you want. The tidying up around the other issues comes after, and we help people think through that as well.

This Week’s Steps to Confidence: Three Things That Belong on Your Retirement Checklist

When you plan a retirement, you need a list of the things that have to be dealt with. Here are the first three items on mine.

1. Figure out your sitting on the porch number

Retirement income goes first on the list, because if you do not have enough of it, nothing else in retirement goes as smoothly as you hoped. And the first question is the one people cannot answer when they sit down across from me: how much income are you going to need?

I call it your sitting on the porch number. You may have no intention of sitting on a porch in retirement, and that is fine, because the question is a thought experiment. If you quit work and did nothing at all except go home and sit on the porch, how much money would have to land in your bank account every month to cover every bill you have, so that you never have to go back to work to pay them? For some people the answer is five thousand a month. For others it is seventy-five hundred, or ten thousand. Whatever your number is, that is where retirement income planning begins.

Once we know it, the arithmetic gets straightforward. We subtract your Social Security, because that money is already arriving to help you sit on the porch. We subtract your spouse’s Social Security. We subtract any pensions. We add in rental income if you have a rent house or something similar. What is left over is the number that has to come out of your own retirement savings, every month, for as long as you live.

With that figure in hand we can look at what you have saved and work out how long it will last. We want your income to last until you are one hundred. If you live to eighty-five and die with money left, that is a fine outcome. What we are protecting against is the opposite: running dry at eighty-five and living to ninety-three.

2. Build a plan for taxes before the government builds one for you

The second item is how you will manage taxes in retirement, and most people have given it no thought whatsoever. They are startled when I tell them that income taxes will probably be their single largest expense in retirement. It is nonetheless true.

My own view is that tax rates are more likely to rise over the course of your retirement than to fall, and that you should plan accordingly rather than assume today’s rates are permanent. Tax law changes, and it changes on a schedule that has nothing to do with your plans, so this is worth reviewing with your tax professional against whatever the law says in the year you are reading this.

Now consider the position that puts you in. For thirty or forty years you have been putting money into an IRA or a 401(k), which are very nearly the same animal, and taking a tax deduction every time you did it. Now you retire and start pulling that money out. And if you do not pull it out voluntarily, the government will eventually make you. Under current law, if you were born in 1960 or later, required minimum distributions begin at age seventy-five, and those ages have been moved by Congress more than once, so confirm yours.

That is the whole argument. Today you control whether you take income out of that account, and today you control the rate at which you pay. A day is coming when you will control neither.

That is manageable, but only in advance. Helping people manage it is a great deal of what we do at WealthCare Retirement Solutions, with the goal of getting you to a zero percent tax bracket in retirement where it is achievable, and to the lowest bracket available where it is not.

3. Decide how you will pay for long-term care

The third item is the hidden boogeyman in the bushes, and most people pay it no attention at all. I think that is because it is intimidating and because it is genuinely hard to know how to pay for it.

What I have found is that most people ignore long-term care entirely, because they believe the only option is expensive long-term care insurance of the use-it-or-lose-it variety. That objection is fair as far as it goes. If you are fortunate enough to die peacefully in your sleep, you will never use that policy, and every premium you paid into it is gone.

But that is not the only tool available. There are a number of better alternatives, and the one I will mention here is life insurance with an accelerated death benefit. People dislike life insurance because it only pays when you die. It is really death insurance. A policy with an accelerated death benefit behaves differently: it will pay you while you are still living to cover your long-term care expenses. The specific terms vary a great deal from one policy and one carrier to the next, so this is a conversation to have with a planner who will read the contract with you.

The Bottom Line

The go-go years, the slow-go years and the no-go years each arrive with their own challenges, and a good retirement planner helps you prepare for all three rather than the one you happen to be standing in. Fund the fun early without mortgaging the later decades. Account for Medicare and long-term care before the bills show up. Get the documents, the powers of attorney and above all the beneficiary designations in order while it is a calm conversation rather than an emergency.

Do that, and retirement stays vibrant for all thirty or forty years of it. Skip it, and the golden years have a way of going rusty and dusty on you. Nobody has to let that happen.

Barry Watts is a retirement designer and tax strategist with WealthCare Retirement Solutions, the author of the book Watts on Wealth, and the host of a television program and radio show by the same name. Our YouTube channel is also called Watts on Wealth. If you are interested in listening to our podcast, it’s called The Truth about Taxes and Retirement and is available wherever you get your podcasts. Investment advisory services are offered through WealthCare Asset Management, LLC, an SEC registered investment advisor. Tax strategy, tax compliance, accounting, and insurance services are provided through its affiliate, WealthCare Tax Advisors, LLC. Remember: Investing involves risk, including the potential loss of principal, and past performance never guarantees future results. Any references to protection, safety, or lifetime income may refer to fixed insurance products. Insurance guarantees are backed by the financial strength and claims-paying ability of the issuing carrier. This article is for informational purposes only and should not be used as the basis for personal financial decisions without first consulting your personal qualified advisor. Case examples are illustrative of planning work performed for specific clients and are not a promise of similar results.

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