Retirement doesn’t happen on your last day of work. In our view, it happens over the year leading up to it, in a series of decisions we believe are easier to make early than in a rush. If 2027 is your year, here’s a countdown that may help you prepare for each step.
12 months out: Get a clear picture
- Know your number. We suggest tracking what you actually spend for a few months. We believe a retirement budget should start with real spending, not a guess.
- Pull your Social Security statement. You can log in at ssa.gov to review your earnings record for errors. Your benefit is calculated from that record.
- List every account. Old 401(k)s, IRAs, pensions, HSAs, and annuities. In our view, retirement is a good time to see everything in one place.
9 months out: Make the big decisions
- Decide when to claim Social Security. You can start as early as 62, but your benefit may be permanently reduced. For anyone born in 1960 or later, full retirement age is 67, and delaying until 70 may increase the monthly benefit. We believe there’s no single right age; it depends on your health, income needs, and spouse.
- Review your pension options. If you have a pension, the choice between a lump sum and monthly payments, and among survivor options, is often permanent under plan rules. We believe it’s worth taking your time here.
- Plan for health insurance. If you’re retiring before 65, you’ll generally need coverage until Medicare starts. Options may include COBRA, a spouse’s plan, or the marketplace.
6 months out: Line up the details
- Medicare. Your initial enrollment period begins three months before the month you turn 65 and ends three months after it. Enrolling late may result in lifelong late penalties.
- Build an income plan. We suggest deciding which accounts you’ll draw from first, and how much. In our view, the order you take money out may affect your taxes for years.
- Look at Roth conversions. We believe the years between retirement and required minimum distributions may be a lower-income window for some households. It may be worth reviewing with your tax professional.
3 months out: Paperwork time
- Talk to HR. We suggest asking about your final paycheck, unused PTO, retiree benefits, and what happens to your workplace plan.
- Decide what to do with your retirement accounts. Options generally include leaving it, rolling it to an IRA, or taking distributions. We believe it’s important to compare fees, investment choices, and rules before deciding.
- Set up tax withholding on any pension, Social Security, or IRA income, which may help reduce the chance of an unexpected tax bill.
The first year of retirement
- We suggest checking your budget after a few months against what you planned.
- Review your beneficiaries on every account.
- In our view, a plan should be revisited at least once a year, since life changes.
We believe that the more you can check off ahead of time, the more time you may have to focus on the transition itself. If you’re considering retiring and want help working through this list, let us know.
Sources
- Social Security Administration, “Retirement Benefits”
- Medicare.gov, “When does Medicare coverage start?”
- IRS, “Retirement plan and IRA required minimum distributions FAQs”
- FINRA, “The IRA Rollover: 10 Tips to Making a Sound Decision”