6 Steps to Take as Retirement Nears

April 14, 2023

If you have decided to retire, you may have already been saving and planning for the day you stop working. Here are some suggestions towards making the move from employee to retiree as smooth as possible.


1. Reduce or eliminate your credit card debt

Carrying a high balance credit card into retirement could leave you with a large monthly bill on top of your living expenses. Take the time to pay down debt, even if it means working a few months longer.


2. Get advice on how to take payouts from your pension plan

If you work for a company that still offers an old-style pension plan, you may have a choice about how your benefit is calculated. Before you collect be sure to review your benefit options with your financial advisor.


3. Don’t forget to account for healthcare expenses

Recent estimates show that a 65 year old couple near retirement will need $260,000 to cover future medical costs. (1) Contrary to popular belief, Medicare will only cover about one-half of retiree health expenses – and long term care is not covered at all. (2)


4. Develop an appropriate asset allocation strategy for your investments

We are living longer and many face a retirement that could last twenty years or more. In the past, shifting your assets into more conservative holdings was a smart move. Today, you may need more growth potential in your portfolio to work towards sustaining your savings.


5. Select which accounts you will withdraw from first

As a general rule, if you’re under age 70 ½, it may make the most sense to withdraw money from your taxable accounts first. However, any withdrawal sequence should be carefully planned with your financial advisor and your tax advisor to help prevent any surprising tax bills in the future.


6. Balance your income needs with your estate planning goals

Any plans you have for your legacy may also create financial issues for your children or grandchildren. Money left in an IRA, for example, could bring greater tax consequences to children than money in taxable accounts would. This is another topic where working with your financial advisor and your estate attorney is critical.


Wherever you are in the process, you have the potential to benefit greatly from working with a financial professional who can help you understand your options and implement plans designed to help you feel more confident about your retirement.  

1. AARP.org, January 2013

2. Health Affairs March/April 2008 - Volume 27, Number 2