Not long ago, I sat across from a friend who had just turned 50. She had a successful career, two grown kids, and a 401(k) that looked healthy enough on paper. But when we started talking about retirement, she admitted she wasn’t sure what came next—or whether she was even on track.
That conversation stuck with me because it’s not about how close you are to retirement—it’s about how prepared you are and feel.
That’s why I put together this guide. Whether retirement is 5 years away or 15, these 15 steps to take before retirement will help you plan smarter, avoid costly mistakes, and set yourself up for a future that’s not just financially secure, but fulfilling, too.
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15 Steps to take Before Retirement
1. Get Clear on Your Retirement Timeline
Knowing when you plan to retire shapes everything—from your savings strategy to your healthcare decisions.
- The average retirement age for women in the U.S. is 63 (U.S. Census Bureau).
- “Average” isn’t a target—choose what’s right and best for you.
- Your age affects Social Security, Medicare eligibility, and pension access.
- Use a countdown calendar or tracker to map key financial milestones.
2. Project Your Future Expenses with Realistic Scenarios
Guessing your retirement budget won’t cut it. Don’t be overly optimistic thinking your expenses will be less due to different factors. Therefore, follow these steps:
Start with your current expenses. Adjust for priorities like travel, hobbies, or downsizing.
Consider inflation: At 3% annually, $50,000 today becomes $90,000 in 25 years.
Use tools like FIRE calculators or Fidelity’s Retirement Score to simulate different spending scenarios.
3. Maximize Social Security Strategy
One of the most impactful steps to take before retirement is understanding your Social Security benefits.
- Claiming at 62 = 70–75% of your benefit.
- Waiting until 70 = 132% of your benefit.
- Married? Divorced? Widowed? Explore spousal/survivor options.
- Working past retirement age may increase your benefit—but be mindful of income limits.
4. Assess Your Healthcare Coverage and Long-Term Care Options
Healthcare is one of retirement’s biggest expenses, which may increase as years pass by. Take this into consideration:
- Medicare doesn’t cover everything. Review what’s included and what’s not.
- Consider Medigap or Medicare Advantage.
- The average retired couple will need ~$315,000 for healthcare
- Explore hybrid life + long-term care policies for better value.
5. Evaluate All Income Streams
Diversifying income is one of the smartest steps to take before retirement. Therefore, consider active and passive income as part of your income streams.
- Look beyond 401(k)s: IRAs, annuities, rental income, part-time work.
- Understand how each stream is taxed (Roth IRAs vs. traditional).
- Considers options to invest and make your money grow.
- Use the “bucket strategy”:
- Short-term: Cash
- Mid-term: Bonds
- Long-term: Stocks
6. Pay Off or Re-Structure Debt
Debt limits your freedom. Make your biggest effort to pay off your debt before retiring, otherwise, I will only reduce your retirement money in the early years.
- Tackle high-interest credit cards first. This should be your priority.
- Then handle personal loans or mortgages.
- 44% of retirees carry debt. Don’t be one of them.
- Over 62? Consider reverse mortgages carefully.
- Refinance, as an option to pay less, now while your income is high.
Pro tip: see my article on How To Live On Less Money In Difficult Times to get tips on how you can save money to pay your debt and retire debt-free.
7. Understand and Manage Retirement Taxes
No one wants a tax surprise in retirement.
- RMDs (Required Minimum Distributions) begin at 73 and are taxable.
- Roth conversions before RMD age can reduce taxes.
- Delay Social Security to control your taxable income.
- Work with a CPA or tax advisor to craft a withdrawal strategy.
8. Simplify and Consolidate Financial Accounts
The more accounts you have, the harder it is to keep track—and the more fees you might pay.
- Combine old 401(k)s, IRAs, and investment accounts where possible.
- Fewer accounts make managing taxes, withdrawals, and estate planning easier.
- Before rolling anything over, check for hidden fees or loss of benefits. Always double-check.
- Tip: Try to keep just one account for each purpose (like retirement, savings, and investing).
9. Stress-Test Your Retirement Plan
Hope for the best. Plan for the worst. And test it.
What if the market crashes? Inflation spikes? Make sure you actually have a plan for this.
Run worst-case scenarios with tools like Vanguard’s Retirement Nest Egg Calculator.
Know what you’d trim (subscriptions, travel) and which accounts to tap first.
It’s not fear nor predisposition—it’s smart preparation.
10. Define Your Retirement Purpose
Retirement is a fresh start.
Ask yourself: What do I love? What am I good at?
Try the Ikigai model for alignment between passion and purpose.
Explore:
- Volunteering
- Teaching or mentoring
- Hobbies or travel
- Starting a side project or small business
11. Have a Will, Trust, and Power of Attorney in Place
Estate planning isn’t just for the wealthy.
A will outlines who gets what, don’t leave your loved ones unprotected. A living trust avoids probate delays.
Power of Attorney (POA) lets someone manage finances or health decisions if you can’t. Revisit and update documents as life changes.
12. Update Your Beneficiaries and Title Assets
Don’t let outdated paperwork undo your plans.
- 401(k)s, IRAs, and life insurance go to the named beneficiary—regardless of your will. Make sure you update them accordingly.
- Review annually, especially after major life events.
- Use Transfer on Death (TOD) designations when available.
13. Make a Retirement Emergency Plan
Life happens. Be ready.
- Build a 6–12 month cash buffer for emergencies, including healthcare emergencies.
- Use liquid, low-risk accounts.
- Avoid selling investments when the market is down, unless you are making money.
- Create a written contingency plan for unexpected events.
14. Practice Living on Your Retirement Budget
Retirement rehearsal = confidence.
Try living on your projected income for 3–6 months, adjust accordingly. Adjust habits, cut excess expenses, and spot gaps early.
Think of it as a lifestyle test-drive—low risk, high clarity. Consider relocating if your local expenses are to high.
15. Plan for Emotional and Social Well-being
Retirement affects mental health. Make sure you find something you feel happy and productive with.
- Clinical depression risk increases by 40% post-retirement (Institute for Economic Affairs).
- Combat isolation with:
- Clubs or meetups
- Hobbies and passions
- Counseling or therapy
- Regular social outings
- This is one of the most crucial steps to take before retirement, yet often the most overlooked.
My Final Thoughts
These 15 steps to take before retirement are more than a checklist—they’re an invitation to design the next chapter of your life with intention, wisdom, and heart. Make sure you dedicate time to this.
Whether you’re 25 or 50, it’s never too early (or too late) to start planning for a retirement you’ll love.
Which step are you going to take first?
Last Updated on 28th May 2025 by Emma
