How to Prepare Financially for Retirement

Work your way through this retirement checklist and you will have a successful retirement.

01 of 15

Build Up Your Emergency Fund Savings Account

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Do you have a minimum of three months' worth of living expenses saved in a checking or savings account? Sometimes there are delays in the start date of pensions or Social Security. It is important to have savings you can rely on to cover your bills if you experience delays.

02 of 15

Make a Retirement Budget

Have you spent time analyzing your retirement expenses? Working through a before-and-after retirement budget is important. You should come up with an accurate estimate of what you spend now and what will change after retirement. Underestimating expenses is one of the biggest retirement mistakes people can make.

03 of 15

Determine Your Health Insurance Options

Have you looked at how you will cover medical expenses and health insurance—and have you included these items in your budget? Health insurance coverage can be expensive if you plan on retiring early. Medicare begins at age 65, but, on average, expect it to cover only about half of your total health care expenses.

04 of 15

Learn How Retirement Income Is Taxed

Do you know how your various sources of retirement income will be taxed? Retirees who don't realize that some of their income may need to go toward taxes are in for an unpleasant surprise. When you are planning for your retirement years, be sure that you're preparing for any tax impact.

05 of 15

Make a Retirement Income Timeline

Have you made a retirement income timeline to show you when different sources of income will begin? You can line up an income timeline against potential retirement expenses (also laid out in timeline format) to help you manage cash flow.

06 of 15

Run Scenarios Using Online Retirement Calculators

Have you tried putting your numbers into an online retirement calculator? This helps you see how long your money will last. You can play around with decisions like retirement date, ​the rate of return, and the rate of inflation, and see how these things may affect your retirement income.

07 of 15

Use a Social Security Calculator Before You Claim Benefits

Have you used a Social Security calculator, or worked with a financial adviser who can give advice on your Social Security benefits? Don't begin benefits until you have done an analysis to see when it will be most advantageous to you and your spouse to each begin your Social Security benefits.

08 of 15

Read up on the Best Retirement Investments

Have you studied various types of retirement investment options to learn how they can be used to deliver consistent retirement income to you? Each investment choice will have its own pros and cons. It is best to learn how each tool works before you decide which is best for you.

09 of 15

Make an Investment Plan

Have you created an investment plan so you have a disciplined approach to follow throughout retirement? An investment plan is like a job description. Once you know the job you need your money to do for you, it becomes easier to make the right hire (i.e., select the most appropriate investments).

10 of 15

Read at Least One Book on Retirement Planning

Have you read at least one book on retirement planning? Your money needs to provide for you for a long time. You can't rely completely on other people to give you the best advice. You need to know the basics.

11 of 15

Interview Potential Retirement Planners

Have you had a fee-only financial advisor who has expertise in retirement planning review your retirement plan? You can find advisors who will do that for a flat rate, as well as advisors who will manage your retirement investments and help with planning decisions. Getting a second opinion on such a big decision is probably worth it.

12 of 15

Choose Pension Distributions Only After Analysis

If you have a pension, do you understand your pension choices and know which one is best for you and your family? Pension decisions can be irrevocable, meaning that you may not be able to change them. These decisions should not be made without analysis.

13 of 15

Learn How to Take Money out of Your 401(k)

If you have a 401(k) plan, do you know whether you will leave your money in the plan or roll it over to an IRA account? The right answer may depend on how old you are. If you are over age 59 1/2, consolidating accounts may be your best option.

14 of 15

See How Work Might Affect Your Social Security Benefits

If you plan on working in retirement, do you know how your earnings may affect your Social Security benefits if you begin benefits before your full retirement age? If you are under age 66, have started benefits, and make too much, you may have some of your Social Security benefits withheld until you reach full retirement age.

15 of 15

Learn Medicare Basics

Do you understand the basics of your Medicare benefits and how much your Medicare Part B premiums may be? Medicare starts at age 65, and Medicare Part B premiums are higher for high-income folks. Best to understand how it all works before you get there.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. "When Will My Coverage Start?"

  2. Social Security Administration. "How Work Affects Your Benefits," Page 1.

  3. "Part B Costs."

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