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3 stages of retirement — and how to plan for your income needs in each

Your priorities — and spending — will likely change as you move through retirement. Here’s how to prepare.


TRAVEL? VOLUNTEERING? MORE TIME WITH LOVED ONES? You probably have an idea of your perfect retirement. But don’t count on it staying the same over what could be a period of more than 30 years.


Most people go through three stages of retirement. In the first — let’s call it the Exploring stage — you’re likely going to try new things and pursue your passions and hobbies. You might later transition to the Nesting stage, with more predictable routines and a greater focus on home and family. And later comes a Reflecting stage, where health issues and your legacy assume prime importance.


“It’s critical to understand how your income needs and spending habits will change. That way you can work with your advisor to create a flexible plan for each of these stages,” says Debra Greenberg, director, Personal Retirement, Investment Solutions Group at Bank of America. Below, take a look at how your retirement may evolve over time and what you can do to prepare. Click the links within each section for more detailed tips and insights.


A family smiling, unpacking their car to go camping.


In the first stage of retirement, you might:


Steps you can take to prepare:


Key financial priorities include continuing to invest for growth and future healthcare costs, while also funding increased spending on leisure activities like travel. Ask your advisor:


How can I develop a predictable income stream to cover both my essential and discretionary expenses?


When should I consider taking Social Security benefits?


What strategies should I consider to help protect myself against the biggest retirement expense you may not be ready for as I age?


Should I work part time so I can limit my withdrawals and allow my assets to continue growing?

A percentage increasing to 58 percent to show the percentage of workers who hope to travel in retirement the most frequently cited retirement dreamof workers hope to travel in retirement — the most frequently cited retirement dream.1




A young boy and girl hugging an older adult, presumably their father or grandfather.


In the next stage, you may:

  • Settle into a routine with a more relaxed pace
  • Travel closer to home or to see friends and family
  • Consider relocating or downsizing


Steps you can take to prepare:


As your spending slows a bit, consider using this period to prepare for potentially higher expenses in the next stage when you may face inflation and rising healthcare costs. Strategies to ask your advisor about include:


Should I invest more aggressively to increase the odds that I won’t outlive my assets?


What do I need to think about when renovating my home or relocating?


Will I be ready to cover the cost of long-term care services if I need them later on?




A gray donut circle with a red segment circling around it and 1 by 3 in the hole, signifying the amount of older home-owners who recently purchased a new home to be close to family or friendsA third of homeowners between ages 77 and 97 who recently purchased a new home did so to be close to family or friends.2




Profile of an older woman.


In this stage, you could:


Steps you can take to prepare:


You may want to strike a balance between securing your own financial future and leaving a legacy. Discuss the following with your advisors:


Can my current withdrawal strategy cover the cost of any additional help I may need?


Are my will, power of attorney, healthcare directive and beneficiaries on insurance and retirement accounts all up to date?


Should I consider gifting some of my assets now?




Four human figures, with one highlighted red to show that one-fourth of Americans plan to distribute part of their estate while they are still livingOne-fourth of Americans say inflation has caused them to see a greater need for estate planning.3



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1 22nd Annual Transamerica Retirement Survey, Transamerica Center for Retirement Studies, 2022

2 Home Buyers and Sellers Generational Trends Report, National Association of Realtors®, 2023

3 Wills and Estate Planning Study,, 2023


Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.


This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available


This material should be regarded as educational information on healthcare considerations and is not intended to provide specific healthcare advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.


Long-term care insurance coverage contains benefits, exclusions, limitations, eligibility requirements, and specific terms and conditions under which the insurance coverage may be continued in force or discontinued. Not all insurance policies and types of coverage may be available in your state.

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