Retirement Checklist: How Will You Know When to Retire?

Preparing to Retire? Here’s What to Know

Many people wonder how to decide when to retire. But there’s never a magic age or number that will guarantee a successful and fully funded retirement.

What matters most is that the timing, the amount and the path to retirement fit you. Everyone’s situation is different, and you’ll need to consider your own future needs and goals long before you cash your last paycheck. Working with a financial consultant or tax advisor can help.

Click each question (+) in our Retirement Checklist to gauge your progress in these important preretirement decisions and tasks. Then explore the resources available to help you plan.

Your Retirement Checklist

1. Social Security: Claiming Benefits in Retirement

Your Social Security benefits will likely be a main source of income in retirement. Planning will help you make an informed decision and possibly get the most out of your benefits when you’re ready to retire.

Timing is important and so is your situation. How long will you work before claiming benefits? Will you retire at the same time as your spouse? Can you take advantage of spousal benefits?

Waiting longer may help you maximize your Social Security benefits, but if you need to claim earlier for any reason, you’ll need to determine if you can make do with a smaller benefit amount when you’re ready for retirement.

2. Health Care: Paying for Medical Expenses and Insurance

Health care is one of the biggest expenses in retirement—and many people underestimate how much they’ll have to spend on medical costs. Remember that Medicare won’t cover 100% of medical costs, and a supplemental plan is usually required.

3. Debt: Paying Off Loans Before Retirement

When you retire and transition from a regular paycheck to a fixed income, you’ll want to make sure more of your money goes toward necessary expenses rather than paying interest on loans.

You can compare the debt's interest rate to the growth potential of investing the money to help determine which is your best option. But no matter what the analysis says, if the debt is causing you stress, that’s the most important factor. You don’t necessarily need to be debt-free in retirement, but paying it down may help create peace of mind.

4. Budget: Identifying Retirement Income and Expenses

You may already follow a budget for your daily needs and investments, but things will change in retirement. What will be different? Income will come from investments (or other sources) but not a full-time paycheck. Expenses, including traveling, hobbies and charitable giving, might be different when you retire.

To create a retirement budget, start with your current budget and consider how you’ll need to adjust to a fixed income and new expenses in retirement.

5. The Big Picture: Streamlining Your Finances

Do you have retirement accounts from previous employers? Accounts with several banks or investment companies? Pensions or inherited accounts?

Consolidating your accounts helps streamline retirement planning so you can get a better view of your overall retirement nest egg, especially when it’s time to start withdrawing money (including calculating required minimum distributions from retirement accounts). It also helps you simplify estate planning for you and your heirs.

6. Estate Plan: Creating a Legacy

Part of being ready for retirement should include having an estate plan. It’s important at any age, but if you don’t already have one, it’s important to take care of it sooner rather than later.

The last thing you want is to have your assets tied up in probate if something should happen to you. It’s especially important if you also have a partner who may be relying on your assets—even more so if you want your partner to inherit certain assets but you aren’t legally married.

Make sure your estate plan covers advanced directives and medical directives, as well as your designated beneficiaries. This will make your wishes known and help reduce confusion and angst for your loved ones. Having both a will and a trust will provide a framework for your beneficiaries to inherit your assets smoothly and without the hassle of probate. Both can be simple to create, although you may want to talk with an estate planning specialist to discuss what’s best for your specific situation.

7. Retirement Investments: Rethinking Your Portfolio

Even if you aren’t retired yet, consider when and how you may want to change your investment portfolio to suit retirement. Rebalancing is important because you’ll start spending from your accounts, and ideally, you want your portfolio to grow at a higher pace than you are spending it.

Evaluating what that asset allocation looks like will be different for everyone, but it's important to plan for enough growth potential to meet and exceed your goals.

8. Retirement Income: Your Withdrawal Plan

When the time comes to start spending your retirement nest egg, you’ll need to know how much you can withdraw without increasing the risk of running out of money.

A withdrawal strategy outlines which funds you will withdraw from in retirement and in what order (retirees often start with the least tax-efficient accounts first). A good strategy considers your tax situation, how much you currently have and the time frame for spending the money.

Tally Your Answers: Are You Ready for Retirement?

If you have mostly yes answers in the Retirement Checklist, you’re likely well on your way to a solid retirement plan. But you don’t have to go it alone. Our financial consultants can answer any questions you have about your next step toward retirement.

Too many no answers or not sure how to tackle specific preretirement tasks? We can help with that, too. Explore the resources provided in each section and talk to a financial consultant about ways to jump-start retirement planning.