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The Basics Q&A: How Much Can We Spend on Travel in Retirement?

Q: My wife and I may want to spend more on travel and other leisure activities in retirement. Will we run out of money if we do?

A: It's very common for people to spend more in the early years of retirement, and it's important to build that assumption into your planning. To avoid overspending, you and your wife should think through all of your goals and concerns for your retirement—everything from travel and leisure to where you want to live and how you might handle health care expenses—and start working with your financial advisor on a strategy that takes all of this into account.

Answered by:

retirement-expenses-david-laster

David Laster Head, Retirement Strategies, Bank of America Merrill Lynch

You'll need to get down to basics: consider all of your expenses and your income streams—investments, business, Social Security, even a pension or annuity income. Your home could also be a piece of the puzzle. Moving to a smaller house or a lower-tax locale could free up money each month for those trips you want to take.

If you estimate that your spending will be more than your income, you can make adjustments. Working an additional year or two can help put your savings on a firmer footing. Or maybe working part time for a few years, then taking a few years off to play, then working a little again, will let you enjoy some of what you've been looking forward to while giving your investments extra time to grow.

For more insights into how to make sure your retirement is secure, see "Pitfalls in Retirement,"

Send your top financial questions to TheBasics@ml.com.
We'll answer frequently asked questions here.

3 Questions to Ask Your Advisor

  1. How can my wife and I coordinate when we take Social Security to maximize our benefits?
  2. Does it make sense for me to work a little longer to ensure a comfortable retirement?
  3. Do I have the right mix of investments to meet my retirement goals?

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This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security, financial instrument, or strategy. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. 

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