The most common question clients ask is usually some version of “when can I retire?” and my response is generally something along the line of whenever you want to. The most important consideration is truly how you want to live in retirement and understanding what that looks like. Below I have laid out some critical items for preparing for retirement in the next 12 months. The earlier you can refine your plan the more confident you will be in this major life change.
Retirement planning becomes much more concrete during the final year of employment. The question is no longer simply whether you have saved enough. You must also decide how your spending will be funded, when benefits should begin, how healthcare will be covered, and which financial moves should happen before your paycheck stops. A coordinated plan can reduce uncertainty and help you enter retirement with greater flexibility.
Start With the Retirement Paycheck
Begin with a realistic estimate of annual retirement spending. Separate essential costs, such as housing, utilities, insurance, healthcare, and taxes, from flexible costs, such as travel, recreation, charitable gifts, and family support. Do not overlook irregular expenses, including home repairs, vehicle replacement, and major dental or medical needs. You might want to create a budget or at a minimum review spending over the last year to help validate your recurring expenses.
Model your expenses as well as income from Social Security, pensions, and annuities to determine what your portfolio must provide in retirement. Evaluate options for lump sum payouts versus annuity payments for investments that offer them. This is an instance where robust financial planning is a must. Your plan should incorporate retirement length, taxes, investment mix, risk tolerance, and your ability to adjust spending if necessary.
Build enough cash and short-term reserves to cover near-term withdrawals without forcing investment sales during a market decline. Depending on your level of comfort you may want a six month reserve or longer if a significant portion of your portfolio is in equity investments. Before choosing a retirement date, test the plan against less favorable conditions, including higher inflation, weaker returns, rising healthcare costs, a major home expense, or the earlier death of a spouse. The goal is not to predict every outcome. It is to understand where the plan is resilient and where spending or timing may need to remain flexible.
Coordinate Social Security and Healthcare
Social Security should be evaluated as part of the full plan rather than as a stand-alone break-even calculation. Compare monthly and lifetime benefits at different claiming ages, while considering health, longevity, spousal and survivor benefits, taxes, and the portfolio withdrawals required if benefits are delayed.
Healthcare requires equally careful timing. If you retire before Medicare eligibility, compare employer retiree coverage, COBRA, and ACA marketplace options. If you are Medicare-eligible, confirm enrollment deadlines and compare supplemental coverage with Medicare Advantage. Estimate the full cost of premiums, deductibles, prescriptions, dental care, vision care, and possible long-term care needs. Coverage should be ready to begin when employer insurance ends, with no unintended gap.
Use the Final Working Year Strategically
The last working year may offer opportunities that become harder to use after retirement. Review workplace contributions, employer matching, IRA and HSA eligibility, deferred compensation elections, unused leave, insurance benefits, and the timing of bonuses or equity compensation. For 2026, the employee deferral limit for most 401(k), 403(b), and governmental 457 plans is $24,500. The generally applicable age-50 catch-up is $8,000, while eligible participants ages 60 through 63 may have an $11,250 catch-up. The combined traditional and Roth IRA limit is $7,500, or $8,600 for those age 50 or older, subject to compensation and eligibility rules. HSA accounts also allow a catch up contribution for employees over 50.
Model taxes before finalizing withdrawals or conversions. The years after wages stop but before required distributions begin may create opportunities for Roth conversions, capital-gain realization, or strategic withdrawals from tax-deferred accounts. These choices should also be tested against Social Security taxation, Medicare income-related surcharges, charitable giving, state taxes, and other tax benefits or pitfalls. Confirm withholding and estimated-tax payments so the first year of retirement does not produce an avoidable surprise.
Turn the Portfolio Into a Reliable Income Plan
Your retirement needs a clear operating plan. Decide which accounts will fund spending first, how much cash to hold, when investments will be rebalanced, and how to optimize taxes created by withdrawals over your retirement period. The answer may change from year to year. Taxable accounts can provide flexibility, tax-deferred accounts may create future required distributions, and Roth accounts may be valuable for later-life spending or heirs. Changing market conditions and rates of return may alter earlier plans as relative balances change.
Update Estate Documents and Organize the Details
Review your will and revocable trust, if applicable, along with your durable financial power of attorney, healthcare directive, and healthcare power of attorney. Confirm beneficiary designations on retirement accounts, insurance policies, and transfer-on-death accounts. These designations generally control how the account passes, so they should be coordinated with the estate plan rather than reviewed in isolation. Make sure a spouse or trusted contact knows where important records are stored and whom to contact if help is needed.
A Practical 12-Month Timeline
- 12 months out: Complete a retirement projection, estimate Social Security, compare healthcare options, and inventory accounts, benefits, and insurance.
- 6 months out: Set a preliminary retirement date, choose a withdrawal approach, model taxes, and review cash reserves and investment allocation.
- 3 months out: Finalize benefit elections, begin Medicare or other coverage steps, plan rollovers or transfers, and complete the estate-document review.
- 1 month out: Confirm the first retirement deposit, document the withdrawal and tax-payment calendar, and collect final employment and benefits records.
- First 90 days retired: Verify deposits, withholding, and insurance; compare actual spending with the budget; and avoid unnecessary investment or lifestyle changes while the new routine settles. It is common for spending to temporarily increase for the first year or two after retirement. If you plan for that and give yourself some extra spending room you may eliminate stress about overspending your plan.
Make the Decision With the Full Picture in View
Instead of asking only, “Can I retire?”, ask, “What does retirement need to look like for me to be financially secure and personally fulfilled?” That question encourages a more useful discussion about spending, travel, family gifts, part-time work, and the timing of benefits. A retirement date is strongest when the cash flow, tax, healthcare, investment, and estate decisions support one another and the plan still works when conditions are not ideal. This is a time to lean in to strategic planning with your advisor to ensure your bases are covered and you can spend your time enjoying your hard-earned retirement!
