Despite a setback in longevity due to the Covid-19 pandemic, Americans are on track to increasingly live longer than they initially might have thought possible, and soon financial planners could be managing six generations in a single family with some of the older generations doing as much exploring as their descendants.

Ken Dychtwald, CEO and founder of Age Wave, a researcher on aging and financial habits in America, made that prediction today as he presented the third release of an ongoing survey of retirement expectations and realities at the Next Chapter 2022: Rockin’ Retirement virtual conference. Next Chapter is a joint venture produced by Financial Advisor, The Execution Project and the Money Management Institute.

The latest data-gathering and analysis, conducted in collaboration with Harris Poll and Edward Jones, took a granular approach to the life phase called retirement, and “Longevity and the New Journey of Retirement” now illuminates four sub-phases that require different approaches to client money management.

“How come when we talk about retirement, we talk about it like it’s a light switch? You’re not retired, and then you are,” he said. “So we’re very proud of the fact that in this new body of work we’ve modeled out the stages of retirement, and we’ve put a little flesh on the bones as well.”

The first phase, which actually accounts for the 10 years before retirement, is the Anticipation phase, he said. It’s marked by optimism and excitement over the prospect of retiring, with some anxiety over financial readiness. This is where people may feel they need guidance to know all their options, and, in fact, this is the period in which financial advice is most sought.

The second phase, which runs from the day after retirement to two years, is the Liberation/Disorientation phase. Here, newly minted retirees are excited by new freedoms and the luxury of time, but they’re also uncertain about how to spend their time and money. Some 25% of retirees in this phase consider themselves semi-retired and may still work, Dychtwald said.

From year three to 14, retirees are in the Reinvention phase, which is the heart of retirement. Now is when retirees do the most and explore the most, and family is a growing pleasure. Health, however, becomes more of a concern, and this is where retirees learn to shift their mindset from accumulation to distribution.

“This is a big deal. It’s the major, first-time-in-life question of ‘How do I shift from trying to accumulate to distributing?’” Dychtwald said. “It’s not just an economic thing, it’s a psychological thing. If you’ve been getting a check your whole life, how do you live on a lump sum? How do you know inflation isn’t going to eat away at what you have, or how do you feel about spending money not knowing how long you’re going to live? This becomes the new focus of financial services as we have tens of millions of retirees in this stage.”

A lot of financial advisors don’t realize they need to have ongoing discussions with retirees about managing their finances in retirement, he continued. And the survey found that 36% of retirees feel managing money and expenses is more confusing during retirement than it was when saving for retirement, and that’s definitely a place where a planner can add more reassurance. But at this stage, there are even more serious topics for financial planners to consider addressing, he said.

“We asked people in this heart of retirement, ‘Are you willing to offer financial support to your family even if it could jeopardize your own financial future?’ And get a load of this—71% said yes,” he said. “That’s dangerous. Generational generosity that sacrifices your clients’ own financial stability is a big topic that you might want to explore with them.”

At around year 15, retirees enter the last stage: Reflection/Resolution. Happiness, contentment and enjoyment remain strong, even if there’s been some downshifting due to health issues. Clients have for the most part learned to live within their means and have remained resilient even in the face of loss.

“And people get very serious about wanting to talk about the legacy they want to leave,” Dychtwald said.

But when asked about how they want to be remembered, the survey found the top two responses were for their personal characters and for the experiences they shared with loved ones. The bottom two were work accomplishments and the wealth they accumulated and bequeathed.

“Now I know that wealth matters, believe me. I’ve seen the stats. The more financial engines people have, the more security and possibility for well-being they’re going to have,” he said. “But when people think about what matters most in their lives it’s not their money. It’s who they are as people.”

The survey results broke retirees down into four personality groups—Purposeful Pathfinders who always saved and were financially literate (23%), Relaxed Traditionalists who started saving a little bit later than Pathfinders but are still doing well in retirement (26%), Challenged yet Hopefuls who started saving in their 40s but are still positive about retirement (20%) and the largest of the four groups, the Regretful Strugglers (31%).

Regretful Strugglers started saving late, if at all, made withdrawals along the way, and now cannot live comfortably on what they have, the survey categorized.

“The name says it all. These people are pessimistic, and they’re not enjoying their retirement at all. They’re the least active, feel the most anxious and are the worst prepared,” Dychtwald said. “We need to feel empathetic and respectful of these people because they’ve been hit by a disproportionate number of challenges. But we could also look back in their lives and see that they were destined to be Regretful Strugglers decades before.”

For the two happiest groups—Pathfinders and Traditionalists—the survey uncovered five other patterns of behavior that lead to their enjoyment of retirement:

“Retirement unfolds in stages, and you need to be an expert in the different stages of that journey,” Dychtwald summarized. “You have an important role to play in helping people—and not just wealthy people, all people—not become Regretful Strugglers or Challenged yet Hopefuls, and to live in a dreamy, more enjoyable version of retirement.”