The last year of work is sure to bring excitement as you prepare for the next phase of your life in retirement.
But before you jump into things like travel, hobbies, or more time with family and friends, there are numerous administrative and financial considerations to think about as you prepare to leave your job behind. These may include what to do with your 401(k), handling how you receive your pension (if you qualify for one), and managing taxes and health care, among many other things.
Retirement planning checklist
Consider using our retirement transition checklist below, which highlights key milestones, along with links to relevant stories, to help you navigate your final year of work.
Retirement planning checklist for the year before retirement: Make key decisions early
- Choose your target retirement date.
- Take time to understand concepts like the “income valley” and their impact on retirement income.
- Check your 401(k), 403(b), or other retirement account investment mix. Will it work for you in retirement?
- If you qualify for a pension, understand how pension-claiming alternatives can affect payout.
- Weigh options for claiming Social Security and how it supports retirement income.
- Research health care coverage options and costs.
- Discuss post-work plans with your spouse or partner.
- Is relocation to another state or locale in the picture? See if it could save you money.
Retirement planning checklist for 6 months out from retirement: Make the most of your last working months
- By increasing 401(k) contributions you could maximize an important tax-deferral opportunity. Is this right for you?
- Learn about traditional and Roth IRA contributions, if eligible, and how they can help fund longer-term retirement income needs.
- Stay on top of bonus and vesting timing.
- Your employer’s health care plan may have exit rules, know what they are.
- Do you understand non-qualified deferred compensation (NQDC) payout timing, if eligible?
- Is an annuity right for you? See how guaranteed income can provide peace of mind.
- Should you have an emergency fund in retirement? (You may need less than you think.)
- Stress test your retirement income plan.
Retirement planning checklist for 3 months away from retirement: Tie up loose ends
- Confirm bonus eligibility and pension elections and crediting.
- Review key health insurance deadlines and put your post-work care plan in place.
- Prepare for health-insurance transition (COBRA / ACA / Medicare bridge).
- Figure out your estimated tax withholding once your paycheck stops.
- Confirm the timing of your Social Security and Medicare decisions.
Checklist for your first year of retirement: Adjusting to your new financial reality
- Manage tax-efficient withdrawals while in the so-called income valley.
- Monitor income changes to help avoid tax surprises.
- Understand rules around Roth conversions and how they could be appropriate for some during lower-income and lower-tax years.
- Adjust spending, saving, and emergency funds as your retirement lifestyle takes shape.
- If you’ve moved, confirm records and understand the tax implications of your new state.
- Enjoy your new life! Routines, hobbies, travel, socializing, and having fun can keep you grounded and growing.
Are you prepared to retire?
Remember transitioning into retirement is a process. And as you take the first steps toward your life beyond work, it’s always a good idea to consult with a financial professional who can help you come up with a plan that can best suit your needs.