I’m Nearing Retirement—Where Do I Start?

1. Define the retirement you want

Before calculating whether you have “enough,” decide what retirement means to you. Your plan may look very different if you want to stop working completely, work part-time, travel regularly, help adult children, care for parents, move to another state, or split time between the United States and Thailand.

Write down your preferred retirement date, housing plan, major goals, and the people who may depend on you. These decisions shape the amount of income, liquidity, insurance protection, and flexibility your plan may require.

2. Create a complete financial inventory

List every retirement and non-retirement asset: 401(k)s, 403(b)s, IRAs, Roth accounts, pensions, brokerage accounts, savings, real estate, life insurance cash values, annuities, business interests, and expected Social Security benefits. Record account ownership, beneficiaries, approximate values, fees, investment mix, and whether withdrawals will generally be taxable.

Also list debts and ongoing obligations. A mortgage, home-equity loan, credit-card balance, support for family members, or expected college costs can materially change retirement cash flow.

3. Estimate retirement spending

Separate spending into three groups: essential expenses, lifestyle expenses, and irregular expenses. Essential expenses may include housing, food, utilities, transportation, insurance, healthcare, and taxes. Lifestyle expenses may include travel, dining, hobbies, and gifts. Irregular expenses include home repairs, vehicles, dental work, and major family events.

4. Map dependable and flexible income

Retirement income often comes from several sources. Social Security and pensions may provide dependable monthly income. Savings and investment accounts provide flexibility but are affected by withdrawals, market performance, and taxes. Some insurance contracts can provide lifetime income guarantees, subject to contract terms and the insurer’s claims-paying ability.

Compare essential monthly expenses with dependable income. A gap does not automatically mean you need a particular product; it means you need a strategy for how savings, work, Social Security timing, pensions, or insurance guarantees may cover that gap.

5. Plan for healthcare

Medicare generally begins at age 65, but it does not eliminate all healthcare costs. Premiums, deductibles, copays, prescription drugs, dental care, vision care, and long-term care can remain significant. People retiring before 65 also need a bridge strategy for health insurance.

If you are still covered by an employer health plan at 65, Medicare enrollment timing can depend on the employer and coverage. Avoid assuming that Social Security timing and Medicare timing are the same decision.

6. Build tax awareness

Traditional retirement-account withdrawals are generally taxable, while qualified Roth withdrawals may be tax-free. Taxable income can affect federal and state income taxes, Medicare income-related surcharges, and how much of Social Security is taxable. Required minimum distributions may also become part of the plan later.

Tax planning should be coordinated over multiple years. Decisions such as realizing gains, converting money to Roth, beginning Social Security, or taking large withdrawals can interact with one another.

7. Prepare for risk and uncertainty

A retirement plan should be able to respond to market declines, inflation, longevity, health events, family emergencies, and the loss of a spouse. Consider maintaining an emergency reserve, reviewing insurance, diversifying income sources, and updating beneficiaries and estate documents.

Retirement is not one calculation performed once. Review the plan at least annually and after major life, tax, health, or market changes.

8. Turn information into a plan

1. Choose a target retirement date.
2. Estimate essential and lifestyle spending.
3. Inventory accounts, income sources, debts, and insurance.
4. Estimate Social Security and pension income at different start dates.
5. Identify the monthly income gap.
6. Review healthcare and long-term-care exposure.
7. Model taxes across several years.
8. Create a withdrawal and emergency-reserve strategy.
9. Review beneficiaries and legacy goals.
10. Document the next three actions and assign a date to each.

Common mistakes to avoid

• Retiring based only on an account balance.
• Ignoring taxes and Medicare costs.
• Claiming Social Security without reviewing alternatives.
• Moving an old 401(k) before comparing fees, investments, services, and protections.
• Putting too much money into an illiquid strategy.
• Failing to plan for the surviving spouse.

Frequently asked questions

Official sources

• Social Security Administration retirement and Medicare resources
• Internal Revenue Service retirement-plan and RMD resources
• Medicare enrollment guidance from SSA and Medicare