The concept of retirement is really a recent phenomenon, but in the last century it’s become solidly entrenched in the American worker’s mind. No one wants to work during old age, and Social Security isn’t enough in most cases. Preparing for the golden years takes a long time.

There are three distinct phases of retirement investing. Understanding and implementing them will help you plan for retirement on your terms.

Phase 1: Capital Accumulation

The first phase of retirement investing is usually the longest. This is the period when you save and grow your savings as much as possible with the appropriate risk. The Capital Accumulation phase can last decades during your working years as you patiently build up an investment portfolio. This phase can be shortened if you save more, or your investments perform especially well. It can also be reduced if you get a large cash infusion from business deals, inheritance, or possibly winning the lottery.

As we are painfully aware, investments don’t always grow. That’s why it’s important to match your growth strategy with your risk tolerance during the Capital Accumulation Phase. If you shoot for double-digit returns every year, inevitable corrections will probably eat away at your desired rates of return. This is just one of the things to worry about while you are accumulating your nest egg.

Phase 2: Capital Preservation

The second phase of retirement investing relates to keeping your retirement savings intact. During the first phase you were trying to grow your nest egg to a certain amount. During this phase, your goal is to keep what you have gained. You may still be saving, but it’s probably not as much as you were in previous years.

Phase 2 usually starts 3-7 years before your expected retirement and lasts until Phase 3. It’s important to back off your risk appetite during the Capital Preservation phase. Your goal at this time is to maintain your savings with some modest growth to keep up with inflation. You don’t want to make any last-minute mistakes just before retirement.

Phase 3: Capital Distribution

Finally, Phase 3 begins when you start spending your accumulated savings. The goal in this phase is to make sure your nest egg lasts as long as you do. Hopefully, your retirement savings will supplement Social Security, pensions, or other income streams. Regardless, it’s important to make sure you don’t have more life at the end of your money. Preparing well during the first two phases makes the all the difference at the end.