The final six months before retirement are some of the most important. During this window, you’ll want to fine-tune your income plan. This means you should assess your tax exposure, make sure your investment mix supports your goals and double-check your paperwork. Even if you’ve been planning for years, the last stretch before retirement is when all the pieces start to come together, or fall apart. And a structured checklist can make all the difference.
A financial advisor can help you review your income sources, test different withdrawal strategies and confirm that your plan stays aligned with your retirement goals.
1. Revisit Your Asset Allocation
Your investment strategy should evolve as you approach retirement. At this stage, your focus typically shifts from growth to preservation and income. That means reassessing your portfolio to ensure your asset allocation matches your changing risk tolerance.
For example, someone who has spent decades investing in a 70% stock and 30% bond portfolio might now reduce their exposure to equities. A shift to a 50/50 or even 40/60 allocation could help reduce volatility while still generating some growth and income.
Investment Tip: Use this time to rebalance your accounts across IRAs, 401(k)s and taxable investments. Doing so can help you lock in gains and avoid taking losses when you start drawing income.
2. Create or Finalize a Withdrawal Strategy
Knowing how and when you’ll tap into your retirement accounts is just as important as knowing how much is in them. A well-thought-out withdrawal plan can help minimize taxes, extend the life of your investment portfolio, and give you peace of mind.
For example, someone with $800,000 spread across a traditional IRA and Roth IRA might decide to withdraw first from the traditional account to cover early retirement years and delay Social Security. Later, they can switch to tax-free Roth withdrawals to manage their taxable income and avoid Medicare surcharges.
3. Review Your Tax Plan
If you’ve built up significant retirement savings, now is the time to explore strategies that could reduce your long-term tax liability. This includes Roth conversions, tax-loss harvesting and carefully timing withdrawals.
Let’s say you’re in a lower tax bracket now but expect higher income later due to RMDs or Social Security. Converting $30,000 per year from a traditional IRA to a Roth IRA before RMDs kick in could reduce your future taxable income.
4. Estimate and Lock In Healthcare Coverage
If you’re retiring before age 65, you won’t be eligible for Medicare just yet. That makes healthcare one of the most urgent issues to address six months before retirement.
Suppose you’re 62 and planning to retire in January. You might compare options like COBRA from your employer, a plan from the Affordable Care Act marketplace or a short-term medical policy. High-deductible health plans combined with a health savings account (HSA) can offer additional tax advantages.
Investment Tip: Begin shopping early to compare costs, deductibles and provider networks. Even once Medicare begins, you’ll still need to choose between original Medicare and Medicare Advantage, plus consider a Part D prescription plan.
5. Decide When to Claim Social Security
Your Social Security claiming age has a major impact on your monthly benefit. While you can claim as early as age 62, delaying past your full retirement age (FRA), 66 or 67 depending on your birth year, can significantly increase your monthly check.
If your FRA is 67, claiming at 62 permanently reduces your benefit by about 30%. Waiting until age 70 permanently increases it by about 24% above your FRA amount.
Investment Tip: Factor in your life expectancy, spousal benefits and whether you plan to work part-time. Delaying can be especially beneficial if you expect to live a long life or if you’re the higher earner in a couple.
6. Update Estate Planning Documents
Your estate plan isn’t just about what happens after you’re gone. It also provides a clear framework for how your finances and healthcare choices will be managed if you lose the ability to make decisions.
At a minimum, review or create the following:
- A will or trust
- Financial power of attorney
- Healthcare directive
- Beneficiary designations
For example, a retiree who recently remarried may need to update beneficiaries to ensure assets pass to the intended spouse or children.
Investment Tip: Estate planning laws can vary by state. Consult with an estate planning attorney who can help you ensure your documents are valid and reflect your current wishes.
Bottom Line
Six months before retirement is typically the time when you begin putting your plans into action. This period allows you to make final financial and healthcare decisions, such as adjusting investments, planning withdrawals, or confirming your Social Security filing strategy. Taking these steps can help improve financial readiness for retirement.
“A pre-retirement checklist can help you spot weaknesses in your plan and give you time to make adjustments,” said Tanza Loudenback, a Certified Financial Planner™ (CFP®). “Recent tax legislation has introduced new rules around charitable giving, Roth conversions, senior deductions, and more, so ask your financial advisor or tax professional to review your situation and model how these changes may affect your plan.”
Retirement Investing Tips
- A financial advisor can help you build and manage a retirement investment strategy that balances growth, income and risk. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you want to diversify your portfolio, here’s a roundup of 13 investments to consider.
Tanza Loudenback, a Certified Financial Planner™ (CFP®), provided the quotes used in this article. Please note that Tanza is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinions voiced in the quote(s) are for general information only and are not intended to provide specific advice or recommendations.
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