5 Things to Do Before You Retire

Do you know what you want your retirement to look like? That’s the first thing you need to figure out when you’re nearing retirement.

Five cacti in pots in a row. The fifth cactus is blooming.
(Image credit: Getty Images)

For many people, retirement planning is a rather nebulous concept. They stash money away – sometimes thoughtfully, sometimes without true goals in mind – all with a vague idea that someday they will reach retirement, whatever that might mean.

But just letting retirement happen isn’t wise because, once it sneaks up on you, it’s too late, and you’ll wish you had given it more attention. A lot more.

So, if you are closing in on retirement, here are five things to do before you get there:

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1. Envision what retirement is

Perhaps it’s not that surprising that many people arrive at retirement and realize they haven’t given a lot of thought to what they want from it. After all, they were too busy working, raising their families and handling the day-to-day crises that life dealt them. But suddenly, it’s time to give up much of their old routine and try something new, and they don’t know what that “new” will be.

Are they going to travel? Volunteer? See the grandkids more often?

If you’re in that situation, try to envision what retirement looks like to you. Write it down and make it as vivid as possible. Putting it on paper helps make it seem more concrete, and it will be easier to turn your dream into reality.

2. Develop a better understanding of your day-to-day expenses

How much do you spend each month? If you’re like a lot of people, you can’t answer that question.

In many homes, people are so accustomed to the regular paycheck coming in that they don’t bother to budget. They just pay the bills and live off what’s left. But retirement comes with too many unknowns to leave expenses to chance that way.

Where will your income come from once that paycheck stops? How much of your expenses will your income cover? How long will your savings last?

It’s important to understand your overall expenses now, so you can better plan for what’s coming in retirement.

3. Review your assets

Determine what your income sources will be in retirement. Social Security will provide some income, and perhaps you have a pension, though that’s less common with each passing year. But are there other assets you can turn into income? Possibly you have a 401(k), and you figure you can withdraw 3% or 4% a year from that to add to your income. But that strategy doesn’t always work because in a down market, the balance in that account can drop quickly, especially if you are withdrawing money at the same time the market caused the value to drop.

Purchasing an index annuity may be one option for creating a regular income stream. Talk with your adviser about the right solution for your retirement plan.

4. Understand your tax situation

When people think about retirement, they often overlook taxes or misunderstand what their tax situation is likely to be. They know they saved money in their 401(k), for example, and that taxes were deferred on their contributions to that account. They may think that’s OK because they expect to be in a lower tax bracket in retirement. Unfortunately, that may not be the case. It’s even possible that you could be in a higher tax bracket in retirement because several factors could come into play. For example, your other income affects how much of your Social Security is taxable.

Also, when you turn 72, the required minimum distribution (RMD) kicks in on any tax-deferred accounts, meaning the government requires you to withdraw a certain amount each year, whether you want to or not. Depending on the rest of your income, that could bump you into a higher bracket.

The sooner you can sit down with a financial professional who understands taxes, the better.

Here’s just one way you can reduce your retirement tax bill with early planning: If you are 62, the RMD doesn’t start for another 10 years. You could use that decade to begin converting your tax-deferred account to a Roth account, where the money can grow tax-free, and withdrawals won’t be taxed. Get a tax analysis to help strategize the right solutions for your current retirement plan.

5. Review the risk in your portfolio

How much risk do you have, and how much risk do you want? Often, when people review their portfolios, they discover they have more risk than they realized, and they shift some of their investments into more stable funds.

A rule of thumb that’s often used is to subtract your age from 100 to determine how much to invest in equities. If you are 60, then you would put 40% of your portfolio in the market and keep the other 60% in something less volatile. Of course, general rules don’t work for everyone.

If you have done a great job of planning for retirement up until now, it’s possible you can and should reduce the risk in your portfolio. But if your retirement planning failed to measure up, you might need more risk to try to get back on track. Otherwise, you could face another risk – living longer than your money lasts.

Yes, this is a lot to think about and to work your way through as retirement approaches, but you’ll be glad you took the time to do it.

And remember, you don’t have to do it alone. A financial professional can help you tackle the more daunting parts, providing advice to improve the odds that retirement will be everything you want it to be.

Even if you don’t know what that is yet.


The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Cory Chapman, Investment Adviser Representative
Founder, Managing Partner, EFC Wealth Management

Cory Chapman of EFC Wealth Management has previously passed his series 6, 7, 63, 65 and 24 securities licenses. He is still currently utilizing his Series 65 securities exam as a registered Investment Adviser Representative. He also holds his life and annuity insurance licenses as well as a real estate license in the state of California and has over 10 years of experience in the mortgage banking industry, with an extensive knowledge of estate planning and taxation.