The three phases of retirement

Everyone loves to read articles about "The Best/Worst Places to Retire," but the choice of where to live in your non-working years is about more than just financial analysis and weather, isn't it?

Like most aspects of your financial life, the earlier you start thinking about it, the better. I remember asking former clients Bill and Barbara about this topic when they were in their late 50s and still working full-time. Bill was an engineer and Barbara was a schoolteacher. They had planned to work seven to 10 more years, but Bill came armed with a spreadsheet that compiled tax and cost-of-living data, with a dash of climate stats sprinkled on top. He had the perfect place: Celebration, Fla. Barbara chortled and said, "I hope you have a nice time there. I'll see you for a couple of weeks in March!"

Barbara said there was no way she was leaving her grandchildren behind in Rhode Island. And she added, "Don't tell me that they'll come down and visit! That's a lot different than us being able to attend band concerts and ball games whenever we want." Bill argued that they would have more money in Florida, to which Barbara said, "Then we'll cut something out of our budget here!" The case was closed . . . but then something changed. Five years later, the grandkids got older and busier. All of the sudden, their earlier decision wasn't panning out as planned, and now Barbara thought Florida didn't sound so bad after all.

What seems attractive at 65 might not make sense at 80, which is why retirement isn't one event, it's more like three phases: Phase 1, from ages 65 to 72; Phase 2, from 72 to 85; and Phase 3 after 85. You're not going to move three times, but as you think about where you want to spend retirement, considering the three potential phases might help you hone in on a plan.

Phase 1-- Family, Friends and Familiarity Sometimes during early retirement, people are content to either stay in their homes or downsize within their current communities, where family and friends are nearby and they know where everything is. This is also the phase where most travel occurs, because you still have enough strength to enjoy and endure the wonders and challenges of travel, while enjoying the peace of returning to the place you know and love.

Phase 2-- Engagement, Activity and Accessibility This is the phase when you might not want to put up with one more winter, and when your kids and grandkids are just a bit too busy to allow you the same depth of involvement in their lives. Lots of people in this phase head to retirement communities or locations where there are activities geared toward retirees. It's a vital time to find ways in which to engage socially and intellectually. This is when some of those "best of" lists can come in handy because they might open your eyes to an area you may not have previously considered.

(Some resources include AARP's "10 Affordable Cities for Retirement," TopRetirements.com's "Worst States to Retire 2012," Money Magazine's "25 Best Places to Retire" and U.S. News & World Report's "The 10 Best Places to Retire in 2012.")

Phase 3 -- Companionship, Care and Convenience If you are lucky enough to have your health by age 85, you also are wise enough to understand that your needs are changing. You may not have quite as much energy, but you still want companionship and access to some social activities in order to fight the isolation that can sometimes seep into your life, with convenient access to care and caregivers.

Bill and Barbara probably ended up in the right location in sunny Florida, but with some forethought, getting there could have been a little less contentious, and they could have gotten there with a little more money in their pockets. While there's no doubt that your financial circumstances will influence where to live the later part of your life, the three phases of retirement might help you think about how you want to live it.

Jill Schlesinger is the editor at large for CBSMoneyWatch.com and writes this column for Tribune Media Services.