Is your retirement date finally approaching?
We spend years planning for retirement, so it’s no surprise that as the date grows closer, things can start to feel a little overwhelming.
According to Angela Dorsey, CFP, MBA, a Comprehensive Fee-Only Financial Planner from Dorsey Wealth Management who specializes in Wealth Management and Retirement Planning for Women and Couples, the people who end up retiring comfortably tend to have a few things in common.
They handle these 9 things well before their last day of work.
1. They Build a Clear Retirement Plan Long Before the Date Arrives
People who retire comfortably don’t wing it.
If you haven’t already, now is the time to review or create an actual retirement plan.
This should cover everything from exactly when you’ll retire to how you’ll spend your time once you get there.
Will you be retiring with a spouse?
Do you want to work part-time, volunteer, or travel?
The answers to these questions shape everything else on this list, so it pays to be both intentional and realistic about your plans.
2. They Decide When to Claim Social Security Ahead of Time
Deciding when to take Social Security benefits is one of the biggest financial decisions in the year leading up to retirement.
Depending on your age when you retire, you could be looking at reduced benefits (age 62), full benefits (age 67), or maximum benefits (age 70).
If you retire but delay claiming, you’ll need to plan for an alternate income stream in the meantime.
Once you turn 62, your benefit amount increases annually based on the cost-of-living adjustment, even if you haven’t claimed it yet.
If both you and your spouse worked and contributed to the Social Security system, you have two benefit amounts to think through.
Married couples often use strategies like taking one benefit early and delaying the other until age 70 to maximize their total benefit.
3. They Build a Realistic Retirement Budget First
Once you’ve sorted out Social Security, it’s time to look at all your other income sources and build a realistic budget.
With all that newfound free time, it’s easy to overspend without noticing.
But since retirement income is usually fixed, a budget you can actually stick to is one of the smartest moves you can make in the months before the big day.
Overspending, even briefly, can shave years off how long your savings last.
The budget doesn’t have to be perfect, but it does need to be honest.
Try tracking your expenses for a couple of months to see what you’re really spending, then look for areas to trim or costs that might rise in retirement.
4. They Max Out Savings in Their Final Working Year
If you’re earning solid income in your last year of work and don’t need all of it for daily expenses, this is the time to contribute more to a tax-advantaged account like a traditional or Roth IRA, 401(k), or 403(b).
These accounts allow higher contribution limits once you’re over 50, so pushing a little extra in can boost your nest egg while lowering your taxable income right before you stop earning a paycheck.
5. They Map Out a Tax-Smart Withdrawal Strategy
A lot of people assume that how and when they withdraw from their retirement accounts doesn’t matter much, as long as there’s a decent amount saved.
Many also assume they’ll automatically land in a lower tax bracket once they retire, but that’s not always the case.
The timing of withdrawals makes a real difference. A $50,000 withdrawal from a Roth IRA has a very different tax impact than the same withdrawal from a traditional IRA.
Pull money out without a plan, and you could trigger higher Social Security taxes, an investment surtax, capital gains taxes, or even higher Medicare premiums, all of which eat into the money that’s supposed to carry you through retirement.
People who retire comfortably map out a tax-efficient withdrawal plan ahead of time.
6. They Lock Down Healthcare Coverage Before Their Job-Based Plan Ends
Healthcare is one of the biggest gaps people overlook.
Before retiring, use any remaining employer healthcare benefits: get your physicals, check-ups, and prescriptions handled, especially if you’ve already hit your deductible for the year.
If you have an FSA, spend it down; if you have an HSA, consider paying costs out of pocket so those funds keep growing tax-deferred.
Then map out what comes next. If you’re turning 65 around retirement, mark your calendar for Medicare enrollment.
If there’s a gap between your retirement date and Medicare eligibility, you’ll need to bridge it through the Health Insurance Marketplace, COBRA, private insurance, employer retiree coverage, or a spouse’s plan.
Costs and coverage vary a lot between these options, so it’s worth comparing well ahead of time.
7. They Plan for Long-Term Care Costs
Long-term care is something too many people put off thinking about.
It’s estimated that 70% of today’s 65-year-olds will need long-term care services at some point, and without a plan, those costs can spiral fast.
The year before retirement is the time to assess your needs and consider long-term care insurance to supplement what you can cover out of pocket.
Think through your family health history, lifestyle, and projected life expectancy.
It’s not the easiest thing to sit with, but planning ahead protects the savings you’ve worked so hard to build.
8. They Take a Hard Look at Their Housing Situation
People who retire comfortably ask themselves honestly whether their current home still makes sense.
Are you an empty nester in a five-bedroom house?
Have you always wanted to relocate?
Do you still have a mortgage?
Could you comfortably age in place, or would you need significant accessibility modifications down the road?
Since housing is one of the biggest ongoing expenses in retirement, it’s worth thoroughly weighing your options well before your last day of work.
9. They Get Their Estate Plan in Order
Before stepping away from work, it’s worth reviewing your estate plan and your life insurance along with it, since many employer group and supplemental policies expire once you retire.
At minimum, you’ll want basic documents in place: a will, a durable power of attorney, and a healthcare power of attorney, so your wishes are clear and someone you trust can act on your behalf if needed.
If your estate is more complex, it may be worth looking into trusts as part of the plan.
