Closing in on Retirement? Read This Retirement Checklist

Take care of these tasks for a smooth retirement

Retirement planning is tricky. As you close in on retirement, it's especially important that you have your ducks in a row. If you plan to retire within 10 years, here's a retirement checklist full of tips and tricks to help make sure you're ready for those golden years.

Key Takeaways

  • Save as much as possible in your 401(k)s, IRAs, and other retirement savings accounts.
  • Find out what to expect from Social Security, and think about different strategies for claiming benefits.
  • Figure out how much you'll need to retire with the lifestyle you want. There's still time to make changes.
  • Use a retirement calculator to crunch the numbers and make sure you're on track.

Contribute to Your 401(k) and IRA

For many retirement savers, these are the highest-income years of their careers. This is the time to contribute the maximum amounts possible to your employer's retirement plan, IRA accounts, and the like. While these contributions will not have the years to compound as those made in your 20s and 30s, every bit helps.

Check Social Security

While there is some discussion about the future solvency of Social Security, it's likely that those currently in their 50s will receive their benefits. You can get your statement and check your benefits on the Social Security Administration website.

It's a good idea to check that you have received full credit for all of your earnings. Moreover, it's important to know and understand what your benefits will be if claimed at different ages.

If you are married, there are a number of strategies to consider in terms of the timing of claiming your benefits. A good calculator can help you decide. Two worth trying are the Social Security Administration's Benefits Planner and AARP's Social Security Calculator.


Tips for Closing in on Retirement

Gather Info for All Your Retirement Accounts

These days, it's not uncommon for someone to have worked at five or more jobs over the course of a career. This can lead to a number of retirement plans with former employers. If you're married and your spouse works, this number can easily double. This is of course in addition to your Social Security benefits.

Over the years, I've seen people with old pensions in which they have a vested benefit, old 401(k) plan accounts that they have basically left with their old employer and ignored over the years, multiple IRA accounts, and so on.

This is a good time to make sure you have a list of all of these old plans. It's an even better time to develop a strategy to make sure that old 401(k) and IRAs are consolidated and properly invested, and that your old employer has your current contact information for any old pension accounts.

While many of these old accounts might be relatively small, if you have several, they can add up to real money for your retirement.

Figure in Your Other Financial Resources

This is also a good time to get your arms around your other financial assets that are potentially available to support your retirement lifestyle. These might include:

If your 401(k) account contains company stock, you might benefit by using the Net Unrealized Appreciation (NUA) rules. Also, determine if your company offers retiree health insurance. Will you work full or part-time during retirement?

It's not uncommon for companies to offer incentives for longer-tenured employees to take an early retirement. If you're the recipient of such an offer, consider taking it on two counts.

First, the offer might be quite financially attractive, and second, if you don't take the initial offer, the next such offer in most cases is not nearly as lucrative. And make no mistake, after that first offer you likely are "on the list," so to speak.

Some folks might be lucky enough to be in line for an inheritance from parents or others. I generally urge caution in including this as a retirement asset. Things can happen. Your parents might live longer than expected and the cost of their care could eat away at much of their wealth. 

Determine How Much You'll Need to Retire

You probably thought about this a long time ago. But this is the time to start making some choices about how you will live in retirement and, more importantly, to put some dollar figures to this lifestyle.

Will you be moving or downsizing your house? Will you be debt-free by the time you hit retirement? Will you have adult children to support? Another way to say this is to start thinking in terms of a retirement budget.

Use a Retirement Calculator

There are many retirement calculators available online, perhaps even through your company's retirement plan provider. Some are better than others, so do a little checking in terms of the methodology and the underlying assumptions. The better ones are great tools to give you an idea of whether your plans for retirement are realistic or not.

Most retirement projection tools will ask you to input your retirement plan assets, any pensions, Social Security, and any other investments. Based on variables such as your investment allocation and other factors, these programs will give you an idea of how much retirement cash flow your resources might be able to support.

While you may not like the answer, it's far better to know you have a potential shortfall as early as possible prior to retirement. This might be a good point to find a competent fee-only financial advisor to assist you. Besides their expertise, a qualified advisor can add a detached third-party perspective to your retirement planning.

Think About a Retirement Withdrawal Strategy

One of the more complex aspects surrounding retirement can be determining which of your accounts to tap and in what order. Different types of accounts have different income tax consequences.

Traditional IRA account and 401(k) account withdrawals are usually taxed as ordinary income. Roth IRA accounts, on the other hand, will generally not be taxed as long as you follow certain rules.

Annuities may be taxed in part or totally, depending upon how you take the money. Taxable investments can qualify for preferential long-term capital gains treatment if certain rules are followed. The point is that the rules can be complex, and making poor choices can result in adverse consequences to your financial health in retirement.

Consulting with a qualified tax or financial advisor is a really good idea here, especially if you expect to be in a high tax bracket during retirement.

Stress-Test Your Plan

Even the best-laid plans don't always work out. Give some thought as to what could go wrong. What happens if you suffer a serious medical setback that prevents you from working until retirement? What if your company decides to lay you off prior to your desired retirement age? Will your plans for retirement still work financially?

The Bottom Line

The 10 years leading up to retirement is the time for investors to get their ducks in a row, so to speak. Get a handle on all of your resources for retirement, including Social Security, pensions, retirement accounts, and other assets.

Determine what you will need to support your lifestyle in retirement. If you need the help of a financial professional, get it. A successful retirement takes planning and this time period is crucial to help ensure a successful retirement.

Article Sources
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  1. Social Security Administration. "The Future Financial Status of the Social Security Program."

  2. Social Security Administration. "Create your personal my Social Security account today."

  3. Internal Revenue Service. "Topic No. 312 Lump-Sum Distributions."

  4. Internal Revenue Service. "Traditional and Roth IRAs."

  5. Internal Revenue Service. "Topic No. 410 Pensions and Annuities."

  6. Internal Revenue Service. "Topic No. 409 Capital Gains and Losses."

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