For most of us, retirement is not about sunset strolls on sandy beaches and drinking piña coladas. Instead, it is a serious endeavor that requires careful planning and preparation. Failure to get one’s financial house in order prior to retiring can lead to big problems for seniors. Many people have had to return to full-time employment because they failed to adequately prepare to leave the workforce.

However, taking a few important steps can help you leave your career behind, comfortably and with peace of mind, knowing that your finances are in good shape. This list of five critical steps to take before entering retirement will help guide you.  

1. Take Advantage of Employee Benefits

You should know what benefits are available to you at work before you retire. (Double check with your human resources department, since many of us are not fully aware of all the benefits we have through our employer.) If your dental coverage is good and you or another family member needs expensive implants and bridgework, for example, it would be wise to get that done while you’re still employed. You should also find out what your company’s policy is on vacation and sick/personal days that you accrued during your employment but haven’t yet used. If you won’t be allowed to “cash out” on the extra time when you retire, you should plan on using up those days before leaving.

“Employee benefits such as vacation and sick pay are earned benefits. Think of your overall compensation as two parts, actual pay and earned benefits. If your company does not pay you for these benefits when you leave your job, it is wasted compensation if not taken advantage of,” says Mark Hebner, founder and president of Index Fund Advisors, Inc., in Irvine, Calif., and author of “Index Funds: The 12-Step Recovery Program for Active Investors.”

Are you contributing the maximum amount to your workplace defined contribution plan? Anyone over age 50 can make catch-up contributions to a 401(k) – if your plan allows it – to help the account grow before you begin to use it; the limit in 2017 is $6,000. Taking time to understand your employee benefits, and taking advantage of them while you still can is a smart move.

2. Decide When to Collect Social Security

Social Security is a significant part of retirement income for most people, and each of us must decide the best age to begin collecting Social Security benefits.

For Americans born between 1943 and 1954, full retirement age (FRA) is 66; that’s when you can receive 100% of your benefit. (For those born between 1955 and 1960, full retirement age gradually rises to 67, and remains so for anyone born after 1960.) The earliest age you can begin receiving Social Security is 62, but you will only get 75% of your eligible benefit since you will be collecting longer by starting earlier. At age 65, you will receive 93.3% of your benefit. It can be worth it to put off your exit from the workforce until after full retirement age, however: At 70, your Social Security benefit would rise to 132% of what you would get at 66.

“An important consideration when deciding to take Social Security should be if you’re still working and want to start benefits before your full retirement age. Essentially, you will be penalized for earning more than the threshold will allow ($1 will be deducted for every $2 you earn above $15,720),” says Carlos Dias Jr., wealth manager of Excel Tax & Wealth Group in Lake Mary, Fla. (In the year you reach FRA, $1 is deducted for every $3 you earn above $41,880 in the months before your birthday. After you reach FRA, you can receive benefits without any limits on your earnings.)

Deciding when to collect Social Security will also be influenced by factors such as your age, the amount of your personal savings, whether or not you have a workplace pension and if you have a spouse who is continuing to work or has a pension. Regardless of personal circumstances, Social Security should be part of any retirement calculations and plans.

3. Pay Off Debt

Probably the most obvious thing to do before retiring is to pay off debt. Of course, a home mortgage is the biggest debt for most folks. To help pay it off faster, “consider refinancing the mortgage if your existing rate is higher than what is currently available. Avoid extending the term, just refinance for the remaining term if you can lower the interest costs. It can be more difficult to obtain a loan when you no longer have employment income,” says Charlotte A. Dougherty, CFP®, founder of Dougherty & Associates in Cincinnati, Ohio.

You should also be sure to pay off other debt before retiring, such as car loans, credit cards, lines of credit and any student loans you’ve taken on for your children or grandchildren.

Regardless of the type of debt, it is best to be rid of it. A 2015 study by the Employee Benefit Research Institute in Washington, D.C., found that Americans were retiring with an average debt load of $73,211, and that retirees on a fixed income were struggling to pay down their debt.   

4. Make Arrangements for Health Coverage

If you’ve always relied on your employer for health coverage, you’ll need to figure out what to do once you retire. Will you take out private insurance? What kind of Medicare plan makes the most sense for you? Keep in mind that Medicare does not include dental or vision care. (See Medicare 101: Do You Need All 4 Parts? and Medigap vs. Medicare Advantage: Which Is Better? for more on this topic.)

Conduct your due diligence on this issue well before you leave the workforce and know your options. As a senior citizen, you – and your spouse or partner, if you have one – will rely on the healthcare system at some point. Sourcing the appropriate health coverage and ensuring that it is affordable on your budget is critically important. Not doing so can have dire consequences: A 2013 study published in the “Journal of General Internal Medicine” calculated that out-of-pocket medical expenses incurred in the last five years of life bankrupted one in four American seniors.

5. Downsize Everywhere You Can

Moving from a house to a condominium or apartment is most often mentioned when financial discussions turn to the topic of downsizing. (See Downsize Your Home to Downsize Expenses for more.) Yet there are many areas of your life where you can downsize. And by downsize we mean cut your expenses. Consider going from two cars down to one. Or, cut the cable television and watch a more affordable TV- and movie-streaming service. How about telling your adult children it’s time they got a place of their own?

Examining your monthly expenses and finding areas to cutback or downsize is an exercise that every person should undertake before entering retirement. You will likely be surprised at the ways you can lower your expenses and save money.

You may also want to read Retirement Downsizing Tips (Not Your Home).

The Bottom Line

Living happily ever after in retirement is a great notion. But you won’t get very far unless your finances are in order when you leave full-time employment. Taking time, in advance, to make sure that you are financially prepared for the next phase of life is the best thing you can do for yourself and your loved ones.