Skip To Content

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:

  • Travel the world, learn new skills, volunteer and take up new hobbies
  • Move to a new locale and/or purchase a second home
  • Start a new business or work part-time


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 increased medical costs 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 65 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:


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 health care 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 older homeowners who recently purchased a new home did so to be close to family or friends2




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 advisor:


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


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


Should I consider gifting some of my assets now?




Three human figures, with two highlighted red to show that two thirds of Americans plan to distribute part of their estate while they are still livingTwo-thirds of Americans plan to distribute part of their estate while they are still living.3



Choose your advisor in a more personalized way

All our advisors are committed to putting your needs and priorities first. Find some who match your personal preferences too.


Try Advisor Match

Want us to contact you?

1 Transamerica Retirement Survey of Workers, 2022

2 National Association of Realtors, 2021

3 Merrill and Age Wave, Leaving a Legacy: A Lasting Gift to Loved Ones, 2019


Important Disclosures


Opinions are as of 05/20/2022 and are subject to change.


Investing involves risk including possible loss of principal. Past performance is no guarantee of future results.


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


The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).


Investments have varying degrees of risk.


You need to answer some questions first

Then we can provide you with relevant answers.

Get started