About To Retire? Follow These Steps for a Seamless Transition

Seniors who are about to retire can be forgiven if they are apprehensive about their upcoming retirement. Currently, retired seniors don’t exactly paint a rosy picture.

New data from American Advisors Group (AAG) shows that seniors are worried about their retirement savings.

The data show that seniors feel the economic strain, and some fear they will outlive their savings.

  • 89% of seniors answered “yes” there is a Retirement Savings Crisis
  • 43% of seniors rated the condition of their retirement savings as fair or poor
  • 47% of seniors say they find it difficult to save for retirement
  • 44% of seniors feel they have not saved enough to retire comfortably
  • 57% of seniors say they are only somewhat optimistic or not optimistic at all that their level of savings will last through retirement
  • Almost 40% of seniors are worried about making ends meet
  • Almost 60% of seniors are cutting back on non-essentials to save money

So instead of dreaming about retirement gifts they may get, people about to retire should take the following steps to make the transition as seamless as possible.

Key Steps

David Edmisten, CFP, and Founder of Next Phase Financial Planning, LLC, suggests taking a few key steps to be more confident as they are about to retire.

“For someone who is about to retire, there are some key financial steps to take.  First, people entering retirement should make sure they have 18-24 months’ worth of expected spending set aside in cash.  This will allow them to retire with confidence, knowing the money they need to spend is set aside and available as needed.  Second, new retirees should have a clear understanding of all of their sources of retirement income and final payouts from their careers.  This can include sales and performance bonuses, employer stock options, non-qualified deferred compensation, payout of accrued PTO, pensions, etc.  Each person should have a clear understanding of all their forms of compensation and income to make sure they receive everything and understand when it will be available and the tax consequences for accessing it.”

Jonathan Bird, CFP, Farnam Financial, says, “Make “catch-up” contributions to your retirement accounts. These contributions can be made in addition to your normal contributions. For the tax year 2023, you can make 401k catch-up contributions of $7,500. You can also make $1,000 in catch-up contributions to your IRA.”

He adds, “Remember that the worst thing you can do is enter retirement with a portfolio that is overly aggressive and then sell after the market drops. There is a tremendous psychological difference between selling investments before you’re retired and after.”

Review Your Budget

Michael R. Acosta, CFP, ChFC, CSLP, Genesis Wealth Planning, LLC, says, “People who are about to retire should first take inventory of all the assets they have at this very moment along with the potential benefits they’ll be losing once they exit the workforce.”

“For individuals retiring before age 65, they don’t quite qualify for Medicare which will make the cost of health insurance one of their greatest expenses. They should also review their budget and break out their expenses into two categories “fixed” and “variable.” At the very least they want to make sure that they can cover their fixed expenses with their current distribution strategy understanding that their income source(s) will no longer be from an employer but from their accumulated assets.,” says Acosta.

“It might be in their best interest to work with a financial planner to design an income distribution plan using one of the three approaches: (1) Systematic Withdrawals, (2) Bucketing, or (3) Flooring.  One of the greatest risks they’ll need to be mindful of is “longevity risk” which is the risk of outliving their assets. ”

Make It Simple

“New retirees can also benefit from getting all of their finances organized and consolidating accounts as much as possible within the context of their financial plan.  A simpler financial picture can make it easier to manage their retirement investments and distributions, which provides clarity and peace of mind.  Most new retirees will benefit from working with a financial planner to help make the most of their resources, plan for tax savings, and make sure opportunities are not missed as they begin retirement,” says Edmisten.

Take Time To Adjust

“An often-overlooked aspect of entering retirement is to allow some time to adjust from working and saving to spending money in retirement,” says Edmisten. “Many people struggle to adjust to the new lifestyle and the change from a saving to a spending mindset.  This process takes time, so new retirees should be clear that the first 6-12 months of retirement is an adjustment period, and it’s ok to feel a bit unsure as one adjusts to the next phase of their life.  Retirees will gain more confidence after they have spent a few months in retirement and worked through the changes as they adjust to their new reality.”


This article was produced and syndicated by A Dime Saved.



Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.