A Financial Planner's Third-Party Perspective on the Honeymoon, Disenchantment, and Beyond

I recently watched the latest video from the Two Sides of FI podcast where they outlined the four distinct phases of retirement. I wanted to offer my take on this concept as an hourly financial planner, having worked with many people through these very phases. I've seen people navigate them very well, and sometimes, very poorly.

Check out my video I did on this same topic.

By visualizing the transition ahead of time, you can think about these things now and avoid some of the common pitfalls people trip up over in retirement. The four phases are: the honeymoon, disenchantment, reorientation, and stability.

Phase 1: The Honeymoon Phase (Excitement & Financial Danger)

This is the most exciting phase, but it’s also the most dangerous from a financial standpoint.

The Time & Emotional Extreme

Clients in this phase are often ecstatic. They are grateful to have so much more control of their schedule and don't have to answer to a boss. They feel a sense of freedom they haven't felt in a very long time and often feel like a new person. This is when big goals are accomplished, whether it be trips, furnishing a new house, new vehicles, or gifts.

The Financial Extreme

This is the hardest time for managing finances. When people are working, they rarely worry about market swings. That changes in the honeymoon phase because your portfolio is a fixed number that must last. Any dip in the market or bad news can cause a massive increase in anxiety.

• The Shock: Clients are checking their accounts more frequently and often notice declines for the first time. Seeing a loss equal to maybe a year's wages can be incredibly distressing.

• The Takeaway: As one memorable, frugal client showed, this is the time to check off major life goals, like buying a new truck with a check. Conversely, I sat across the table from a client who was literally shaking with nerves because she was unprepared for a 20% market downturn combined with health issues. To avoid this pitfall, you must internalize that losses during early retirement are not a question of if, but when.

Phase 2: The Disenchantment Phase (Calendar Creep)

In this next phase, things on your calendar seem to expand and expand. You become busier than you were when you were working.

The Cause

This stems from two main issues:

1. Errand Expansion: Regular errands you used to squeeze in between big events now naturally take up more time because you allow them to.

2. Unfulfilling Commitments: Getting involved with people or projects that seem okay but do not actually offer you any fulfillment (e.g., getting involved with a neighborhood HOA, which can become a nightmare).

Navigating the Pitfall

Clients who do well here are resilient people who don't dwell on negative outcomes. The key to moving forward is getting away from those unfulfilling people and projects that drain your time and energy, even if you feel initial guilt about leaving them.

Phase 3: The Reorientation Phase (Cruising Finances & Navigating Guilt)

This phase is about navigating out of disenchantment and settling back into a sense of normalcy.

The Emotional Battle

It is difficult to pull yourself away from activities and people that drain your energy; people will often try to guilt trip you into staying involved. It is vital not to let them do this.

The Financial Cruise

Finances are generally cruising at this point. Clients often use this time to revisit their financial structure:

• Asset Allocation: Rebalance and revisit the original allocation.

• Portfolio Review: Check for underperforming assets and decide whether to trim them or hold on for a good reason.

• Tax Strategy: Look for missing opportunities from a tax perspective after going through a couple of tax seasons in retirement.

Phase 4: The Stability Phase (Healthy Equilibrium & External Dangers)

Stability is the healthy equilibrium where finances are on track, and you are comfortable with your plan and withdrawal strategy.

The Fulfillment

The most important part of this phase is being able to focus all your resources on activities and relationships that truly fulfill you, make lasting memories, and give you energy. People who reach this point have a noticeable confidence—they know what they are about and where they are going.

The Final Dangers

Even in this stable phase, factors outside your control can knock you out. These are typically:

• Relationship Issues: Often with children or extended family, usually related to tragedy or hard circumstances.

• Emotional Stress: These external shocks can totally rock someone, even if they were financially stable. Vigilance is necessary, even here.

Overall, this concept from Two Sides of FI is helpful for visualizing retirement. Remember that it's not a linear track; you can progress through these phases at different rates or experience multiple phases simultaneously.

At Barrett FP LLC, we offer expert financial planning on an hourly basis, focused entirely on helping you achieve your goals.

Learn more about how we can help you build a resilient and fulfilling retirement plan and see if we're a good fit.