One year from retiring? Walk through these six buckets first — income, health insurance, taxes, and the low-income tax-planning window most people let slip by.
Most people spend 30 or 40 years saving for retirement, and then they make the actual decision to retire in about a weekend. They pick a date, hand in their notice, and figure they'll sort out the details later.
And so the part that gets missed is this: the 12 months before you retire is the window where the biggest decisions get made. Once you've turned off the paycheck and started Social Security, a lot of those levers get harder to pull. Some of them lock for good.
The folks over at fpPathfinder put together a checklist of 32 issues to walk through before you retire, sorted into six buckets — cash flow, health insurance, assets and debt, taxes, long-term planning, and a catch-all "other." We use a version of it with our own clients here in Cedar Falls. Below is how we think about each bucket, in plain English, with the dollars attached wherever we can.
None of this is one-size-fits-all. Everybody's puzzle looks a little different. But if you can answer these questions before you set a date, you're way ahead of most people walking into retirement.
For your whole working life, the money showed up every two weeks whether you thought about it or not. In retirement, you build that paycheck yourself. So the first question is the one we come back to over and over: what's this money for? What do you actually spend in a month?
Not the big annual number — the monthly number. If you need $6,500 a month to live the way you want, where is that $6,500 coming from, and is it reliable?
The next piece is what we call guardrails. Think of your spending like driving up a mountain road — sharp cliffs on either side, and we put up guardrails to keep you in the middle. Your "essential" expenses (housing, food, insurance, utilities) ideally get covered by guaranteed income like Social Security and any pension. The "fun" stuff — travel, the grandkids, the camper — comes out of the portfolio. That way a bad year in the market hits your vacations, not your groceries.
A few things to nail down before you retire:
Does that make sense? The goal here is simple: know your number before you walk away from the paycheck.
This is the one that catches people, especially anybody thinking about retiring before 65. Medicare doesn't start until 65. So if you retire at 62, you've got roughly three years where you have to cover your own health insurance, and that is not cheap.
Your main options in that gap are COBRA from your old employer, a plan through your spouse if they're still working, or a plan off the ACA marketplace. Here's the part most people don't realize: marketplace subsidies are based on your taxable income, not your net worth. So a retiree with a paid-off house and a big nest egg can sometimes show low taxable income and qualify for a real break on premiums — if you plan the income side carefully. That's a lever worth pulling.
Once you hit 65, Medicare kicks in, and there's a whole new set of decisions — Part A, Part B, Part D (think D for drugs, the legal ones), and whether you go Medigap or Medicare Advantage. There's also a tax trap built into Medicare called IRMAA, where a high income two years back bumps up your premiums today. We wrote a whole piece on that one — how Medicare IRMAA works and how to avoid the surprise — because it surprises a lot of people.
One more: if you've got an HSA, get any last contributions in before you enroll in Medicare, because once you're on Medicare you can't contribute anymore. You can still spend it, just not add to it.
While you were working, a market drop wasn't a huge deal — you weren't touching the money, and you were still adding to it every paycheck. Once you retire, that flips. Now you're pulling money out, and a bad year right at the start can do real damage. So the years right around your retirement date are the time to make sure you're not taking more risk than you have to.
We say it this way: if you can hit all your income goals on a 60/40 mix, there's no medal for taking more risk than that. Take the risk you need, not the risk you can stomach on a good day.
On the debt side, walk through what you're carrying. High-interest debt — credit cards, anything north of 7 or 8% — we'd want gone before you retire, full stop. The mortgage is more of a judgment call, and it's both a financial and a non-financial question. Financially, if your mortgage is at 3%, there's no rush to pay it off. Non-financially, some people just sleep better walking into retirement with no house payment. Both answers are fine. It's your decision — our job is to help you see the trade-off clearly.
And while you're in there: check your beneficiary designations. The beneficiary form on your 401(k) and IRA beats whatever your will says. We've seen accounts go to an ex-spouse because nobody updated a form from 1998. Takes five minutes to check.
This is the bucket where we can add the most value, and it's the one people think about the least. Here's why it matters so much.
There's usually a stretch — from the year you retire until the year Social Security and required minimum distributions kick in — where your taxable income drops way down. Maybe you're 64, retired, not yet on Social Security, living partly off cash and savings. For a few years your income might sit in the 12% or 22% bracket instead of where it was. That low-income window is a gift, and most people let it go by without doing a thing.
What do you do with it? A couple of things:
The way we say it around here: we have to pay our share, but we don't have to leave Uncle Sam a tip. There are a bunch more of these levers — seven ways to lower your taxes in retirement if you want to go deeper. And if you're staying in Iowa, the state actually treats retirees pretty well these days — here's why Iowa is one of the better states to retire tax-wise.
Social Security timing. This is one of the biggest decisions you'll make, and it's largely irreversible. Claim at 62 and you lock in a smaller check for life; wait until 70 and that check grows by about 8% a year in the meantime. There's no universal right answer — it depends on your health, whether you're still working, and your spouse's situation. But run the math before you file, not after. The Social Security Administration's own numbers show just how much the timing moves the check.
Estate documents. Before you retire, make sure you've got the basics in place: a will, a financial power of attorney, and a healthcare directive. Here's just to get slightly morbid for a second — if you and your spouse were driving to church on Sunday and got hit by a bus, where would everything go, and who'd be in charge? If you don't have clear answers, that's the work to do. It's not pleasant to think about, but if we don't talk about it, who's going to?
Long-term care. Somewhere around 70% of people will need some kind of long-term care, and it's expensive — a private room in a nursing home can run six figures a year. You don't have to solve it perfectly before you retire, but you should have a plan: insurance, self-funding from the portfolio, or some mix. Going in with eyes open beats getting blindsided.
The checklist has a handful of cleanup items here: consolidate old 401(k)s and stray IRAs so you're not chasing five accounts at four custodians, update your contact info and beneficiaries one more time, and make sure your spouse knows where everything is and how to access it if you're the one who handles the money.
But there's one more question that isn't on any checklist, and honestly it's the one I care about most: what are you going to do all day?
The clients who struggle in retirement aren't usually the ones who ran out of money. They're the ones who didn't have anything to retire to. The ones with hobbies, projects, grandkids, volunteer work, a garden — they do great. The ones who just stop, without a plan for their time, are the ones who get restless and down. So before you retire, give that some real thought. The money is there to fund a life. Make sure you know what the life is.
And remember — it's okay to actually spend this money. We see too many people who saved their whole lives, retired comfortable, and still picked pop cans out of habit because they couldn't give themselves permission. You worked for this. Use it.
Want to work through all 32 issues yourself? Download our "What Issues Should I Consider Before I Retire?" checklist — the same one we use with our own clients here at Ignite — and use it as your pre-flight list.
And if you'd like a second set of eyes on your own situation — especially that tax-planning window, which is the one with a clock on it — that's exactly what we do. We're flat-fee and fee-only, which means we don't sell anything and we're not paid on commission, so the advice is just advice. You can grab a time for a no-pressure intro call and we'll talk it through. Curious how that flat-fee setup works and why it matters? Here's the rundown.
Ideally three to five years out, but the 12 months before your retirement date are the most important. That's when you lock in health insurance, set your withdrawal strategy, and — most importantly — open up the tax-planning window for Roth conversions before Social Security and RMDs start.
Skipping the tax-planning window. There's usually a stretch of low-income years between retiring and starting Social Security/RMDs where Roth conversions and smart withdrawal sequencing can save real money. Most people don't touch it, and it never comes back.
You can, but you need a plan for the gap until Medicare at 65 — COBRA, a spouse's plan, or an ACA marketplace plan. Marketplace subsidies are based on taxable income, so careful income planning can lower those premiums a lot.
It depends. If your rate is low, there's no financial rush. But it's also a non-financial question — some people simply sleep better with no house payment heading into retirement. Both answers are reasonable; just make the trade-off on purpose.
There's no single right answer. Claiming at 62 locks in a permanently smaller benefit; waiting until 70 grows it by roughly 8% per year. It comes down to your health, your spouse's situation, and whether you still have other income. Run the numbers before you file — the decision is hard to undo.