Final answer:
Stage 3, reorientation, is the stage of retirement that involves selective optimization with compensation, where retirees adjust by finding new fulfilling activities within their capabilities.
Step-by-step explanation:
The stage of retirement that involves finding a functional path that achieves selective optimization with compensation is Stage 3, reorientation. In this stage, retirees adjust to their new lifestyle by evaluating their options and engaging in new activities that are both fulfilling and within the realm of their capabilities. This stage aligns with the concepts within gerontology that focus on balancing the losses associated with aging with the gains, and applying selection, optimization, and compensation to navigate through these changes successfully.