If you’re preparing to transition into retirement, there are a few things you need to have squared away before you can truly feel confident that you’re ready for this new phase of life.
The following questions aren’t always easy to answer—in some cases, they may require you to confront some uncomfortable realities about your money and your life. But the only way to set yourself up for success in your golden years is by addressing them head on and as early as possible. That way, you’ll have your answers ready to go when the time comes rather than having to figure everything out on the fly.
Before you embark on your retirement journey, ask yourself:
1. How am I going to pay for my lifestyle?
If you have big plans for your retirement years, you’ll want to be sure you have enough money coming in to help ensure you can maintain your desired lifestyle. “A successful retirement is based on what your lifestyle looks like and the income and the assets you have to pay for it,” says Jermaine Edwards, Vice President, Financial Consultant with Fidelity Investments.
Whether you’re looking to travel, interested in pursuing a personal hobby, or just looking to settle down comfortably near your children or loved ones, having a steady stream of dependable retirement income is critical to realizing your dreams. For this, you’ll need a thoughtfully designed retirement income plan.
Before you develop your plan, it's important to recognize the variety of unique challenges you may face in retirement—especially the impact that inflation, spending, and rising health care costs can have on your finances. With those potential obstacles in mind, you can then assess your potential income sources, such as Social Security or your investment and retirement accounts, to determine whether you can expect to have enough cash on hand to cover your day-to-day expenses through your remaining years. “The more detailed you can be about these inputs, the better and more effective your plan could potentially be,” says Edwards.
You’ll also want to stay focused on the future, by investing your money in a manner that provides the best opportunity for potential long-term growth. “Your portfolio’s asset allocation should be based on the overall strength of your financial plan, your time horizon, and your comfort level with risk,” says Edwards.
By allocating assets with these criteria in mind, you may be able to guard against the prospect of running out of cash down the road while also limiting your exposure to periods of market volatility that could compel you to deviate from your plan (and possibly undermine your ability to achieve your goals). This is especially important if you intend to retire early.
2. Am I prepared to cover rising health care costs?
As mentioned, health care costs can be particularly challenging while in retirement. While it isn’t possible to know how much you’ll need to spend on health care in advance, you can almost count on needing to devote an increasingly larger share of your assets to health care as you get older—both because you’re likely to need more care as you age and because the cost of health care typically rises faster than the average rate of inflation.
“In 2025, Fidelity released its 24th annual retiree health care estimate,” says Edwards, “and what it revealed is that a 65-year-old who retired in that year could expect to spend an average of $172,500 on health care and medical expenses throughout retirement. That was a 4% increase from the previous year.”1
Because of this, having a strategy in place for addressing your future health care needs is an important component of your overall retirement plan.
While you may be able to rely on Medicare, the federal health insurance for individuals 65 and older, it likely won’t cover all of your potential needs. To address any out-of-pocket costs that you may be responsible for, your strategy could include Medicare Supplement (Medigap) plans, long-term care insurance, and health savings accounts, all of which can help defray expenses.
3. Who will I rely on if times get tough?
Though it can be a difficult subject, it’s very important to plan for the tough circumstances that may befall you in retirement, such as a prolonged or severe illness, an accident that leaves you unable to manage your own affairs, or your untimely death. It’s best to establish who will be responsible for overseeing your finances and making decisions regarding your care well before it’s necessary, so that when the time comes there are no doubts about what should happen.
This means you should draft both a power of attorney and a health care proxy. These documents grant someone who you trust the authority to make decisions on your behalf. It’s also a good idea to draft a living will so the person you’ve designated fully understands your wishes about what type of care you wish to receive and what your feelings are regarding potential end-of-life scenarios.
4. What kind of legacy do I want to leave?
If everything goes according to plan, you may accumulate assets that you may not necessarily need to fund your retirement lifestyle. In that case, you may want to begin thinking about where that money should go when you pass on. Perhaps you want to leave it to your children to do with as they please or donate it to a charitable endeavor that you care about. Maybe you want to use your remaining wealth to establish a pool of assets that can help support your family for generations to come.
There are many ways to design a tax-efficient wealth-transfer plan that takes into account your wishes, as well as the needs and desires of your heirs. Whether you gift assets directly, contribute to a 529 college savings plan, establish a donor-advised fund, or set up a multigenerational trust, how you choose to pass on your wealth will depend on your unique financial circumstances and specific goals.
Whatever you decide, be sure that you take steps to pass on your values, as well, so your inheritors understand what the money means to you and what you hope they will achieve with it. “A lot of parents often don’t want to discuss their wealth with their children,” says Edwards. “But later in life, it’s likely that your kids will be helping you with your finances, and when parents and children are already on the same page, it makes the process much easier.”
Consider engaging a professional
Though these questions seem straightforward, finding the right answer to each may not always be easy. If you find yourself struggling to put together a plan that addresses each question to your satisfaction, consider consulting with a financial professional who can walk you through each scenario step by step and offer constructive feedback about the options available to you.