12 Steps to Prepare for Retirement

By Roxanne Martens, MS, CFP®

Retirement is just around the corner, and if you’re planning to step into this exciting new chapter in the next couple years, now is the time to prepare. Crafting a thoughtful plan can help you create a retirement lifestyle that aligns with your goals. This 12-step checklist will guide you through key considerations, from refining your budget to exploring tax strategies, so you feel ready to take on this important milestone with confidence.

Let’s take the first step toward a fulfilling retirement together!

1. Analyze/Set Up Your Retirement Goals

If you haven’t done so already, now is the time to review or create a retirement goal. This should include everything from exactly when you will retire to how you will spend your time. Take the time to think about what you want retirement to look like for you. Will you be retiring with a spouse? Do you want to work part-time, volunteer, or travel the world? The answer to these questions will inform the rest of the tasks on this list, so it’s important to be both intentional and realistic about your plans.

2. Create a Reasonable Retirement Budget

It’s crucial to create a reasonable retirement budget. Once you retire and have more time on your hands, it’s so easy to spend excessively without realizing it. Additionally, since your income is usually fixed during retirement, making a realistic budget that you can follow in the months leading up to the big day is a wise move to make. 

3. Consider Boosting Your Savings Account Contributions

If you’re earning more money in the years before retirement and you don’t necessarily need it for daily expenses, consider increasing your contributions to a tax-incentivized retirement plan, such as a Traditional or Roth IRA, 401(k), or 403(b). These accounts have greater contribution limits for individuals over age 50, and when you raise your contributions, it could reduce your taxable income in the current year while also saving more for retirement.

4. Choose When to File a Claim for Social Security Benefits

One of the more crucial choices you need to make in the year before retirement is when to start receiving Social Security payments. Depending on your age at retirement, you might qualify for reduced payments at age 62, full payments at age 67, or increased payments at age 70. 

5. Select Your Withdrawal Timing Carefully

It’s common for retirees to think that as long as they have a substantial amount saved, it doesn’t make any difference how or when they withdraw their retirement funds. This is not true. For example, a $50,000 withdrawal from a Roth IRA will have a different tax impact than that same distribution from a Traditional IRA. If you take your money and run, you could trigger an avalanche of higher income taxes, investment surtax, capital gains taxes, and even higher Medicare premiums, which will eat away at the funds that were supposed to carry you through retirement. By creating a tax-efficient withdrawal plan prior to retirement, you can lower your tax liability and make strategic withdrawals from your retirement accounts.

6. Consider Your Medicare Options

Once you reach the age of 65, you can enroll in Medicare. If there is a gap between when you want to retire and when you are eligible for Medicare, you can obtain alternative coverage through the Health Insurance Marketplace, COBRA, private insurers, employer retiree insurance, or your spouse’s job. These options can vary dramatically in cost and level of coverage, so be sure to plan ahead.

7. Evaluate Your Long-Term Care Requirements

It’s estimated that 70% of today’s 65-year-olds will need long-term care services at some point in the future. If you don’t prepare sufficiently, long-term care expenses can quickly get out of control. Now is the perfect time to assess your health requirements and think about purchasing long-term care insurance to help cover out-of-pocket costs. Consider family health history as well as your own lifestyle, health needs, and projected life expectancy when thinking about long-term care. 

8. Enroll in Healthcare Plans Sponsored by Your Employer

Make use of any healthcare coverage your work offers before you retire.  Make sure you are up to date on your physicals, check-ups, and prescriptions before retiring, especially if you have already met your deductible for the year. 

If you have an FSA, consider spending down the account, and if you have an HSA, consider paying for expenses out of pocket to keep the funds growing tax-deferred.

9. Review Your Life Insurance Policies

Employer-provided group and supplemental life insurance policies are effective while you’re working. However, they typically expire when you retire, which could leave you exposed. Whether you have a mortgage and want to make sure your family is covered, or you want to provide an inheritance, be sure to review your life insurance needs, as well as any existing policies you have in place. If it makes sense, consider extending your employer’s coverage or look for a private insurance policy. 

10. Think About Your Future Housing Needs

Your home should support the lifestyle you want in retirement. Ask yourself:

• Is my house larger than I need?
• Will I comfortably be able to afford the mortgage and maintenance costs?
• Would I need to make any changes to improve accessibility if needed?

If downsizing, relocating, or making modifications feels like the right choice, take time to explore your options and plan ahead for a smooth transition.

11. Review Your Estate Plan

Review your estate plan to confirm everything is up to date. You should have basic estate planning paperwork like a durable power of attorney, healthcare power of attorney, and a will. In the event of an emergency, having these documents in place verifies that your preferences are understood. If your estate is more complex and you will have significant assets to leave behind, consider utilizing trusts in your estate plan. Always consult with your legal professional when evaluating your needs and whether your current estate plan meets those needs.

12. Speak With a Qualified Financial Planning Advisor

Consult a professional financial advisor. While retirement itself can be a fulfilling time in your life, the preceding year can be stressful, and a financial professional can help enormously.

We’re Here to Help

At CGN Advisors, we know retirement planning can feel overwhelming, but you don’t have to figure it all out on your own. Let’s talk about what’s most important to you and how we can help you make the most of this next chapter.

Give us a call at our Manhattan, KS, office at (785) 340-3434 or our Rogers, AR, office at (479) 335-1034. We’d love to hear your story and help you plan for what’s ahead.

About Roxanne

Roxanne Martens is a CERTIFIED FINANCIAL PLANNER® professional and serves as a Lead Financial Advisor on the team at CGN Advisors, a Fee-Only, financial advisory firm based in Manhattan, Kansas. Roxanne works out of CGN’s Arkansas location, serving clients in the Rogers, Bentonville, Springdale, and Fayetteville areas. An advisor since 2020, she works with both young professionals and those approaching retirement by helping them utilize their growing income efficiently and facilitating strategic cash flows once their regular earned income ends. She enjoys using her skill set to educate and guide clients through life as they make financial decisions and set goals. Roxanne says, “Comprehensive financial planning and investment management takes a lot of trust from the client, and I don’t take that lightly. I genuinely want each of my clients to succeed.” Her favorite aspect of her role is connecting with clients on a personal level, providing clarity and peace, and being able to witness them realize their dreams.

Roxanne obtained her master’s degree in personal financial planning from Kansas State University and holds the CFP® designation. Prior to becoming a financial advisor, she taught in the Personal Financial Planning program at Kansas State University for seven years. As a mom with young children, most of her free time is spent with her husband, John, and two sons, Johnny and Judd. They enjoy living life outdoors—bike rides and spending time at the lake or pool. To learn more about Roxanne, connect with her on LinkedIn.

Investment advisory services are offered through CGN Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. 

Investing involves substantial risk and has the potential for partial or complete loss of funds invested. Investments mentioned may not be suitable for all investors. Before investing in any investment product, potential investors should consult their financial or tax advisor, accountant, or attorney with regard to their specific situation. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.