Retirement is one of the biggest financial and lifestyle transitions a person can experience. And while many people spend years saving for retirement, the final 12 months before you retire are often some of the most important.
The year leading up to retirement is a good time to step back, review the details, and make sure your financial plan aligns with the lifestyle you want moving forward. From income planning to healthcare decisions, small adjustments now can help create more clarity and confidence later.
Here are several important areas to revisit during the year before retirement.
Review Your Retirement Income Strategy
One of the biggest shifts in retirement is moving from earning a paycheck to creating income from your savings and investments.
About a year before retirement, it’s important to evaluate:
- Where your retirement income will come from
- How much you may need each month
- Which accounts you plan to draw from first
- How taxes could affect withdrawals
- Whether your investment strategy still matches your goals and timeline
Retirement income often comes from multiple sources, including:
- Social Security
- Retirement accounts like IRAs or 401(k)s
- Pensions
- Investment accounts
- Part-time work or other income streams
Having a coordinated withdrawal strategy can help create more consistency and reduce surprises during retirement.
Estimate Your Retirement Expenses
Many people assume expenses automatically decrease in retirement, but that is not always the case.
While some costs may go down, others can increase, especially healthcare, travel, hobbies, or supporting family members.
A year before retirement is a good time to review:
- Monthly living expenses
- Housing costs
- Insurance premiums
- Travel or lifestyle goals
- Debt payments
- Emergency savings needs
Understanding what retirement may realistically cost can help you determine if adjustments are needed before leaving the workforce.
Create a Plan for Healthcare Coverage
Healthcare is one of the most important pieces of retirement planning, especially if you plan to retire before Medicare eligibility begins.
Questions worth reviewing include:
- When will your employer coverage end?
- Will you need bridge coverage before Medicare?
- What will Medicare cover?
- What out-of-pocket healthcare costs should you prepare for?
- Do you need long-term care planning discussions?
Healthcare decisions can have a meaningful impact on retirement cash flow, so planning ahead is important.
Decide When to Take Social Security
Choosing when to begin Social Security benefits is a major retirement decision. Your benefit amount can vary depending on when you claim, and timing decisions often depend on factors like:
- Your overall retirement income plan
- Health considerations
- Marital status
- Spousal benefits
- Employment plans
- Longevity expectations
There is no one-size-fits-all answer, which is why many retirees benefit from reviewing different scenarios before making a decision.
Reevaluate Your Investment Allocation
The investment strategy that helped you grow your retirement savings during your working years may not be the same strategy you want once retirement begins. The year before retirement is often a good time to review:
- Risk tolerance
- Portfolio diversification
- Cash reserves
- Market volatility preparedness
- Short-term income needs
Retirement planning is not necessarily about avoiding growth, it is about creating a strategy that aligns with your long-term goals, comfort level, and income needs.
Review Tax Strategies Before Retirement
Taxes continue to play a role in retirement planning, and the year before retirement may create opportunities to review strategies with your advisor or tax professional.
Areas to revisit may include:
- Future tax brackets
- Roth conversion opportunities
- Required Minimum Distributions (RMDs)
- Capital gains considerations
- Withdrawal sequencing
- Charitable giving strategies
Proactive planning may help create more flexibility later in retirement.
Check Your Estate Planning Documents
Retirement is a good time to revisit important legal and estate planning documents. Consider reviewing:
- Your will
- Powers of attorney
- Healthcare directives
- Beneficiary designations
- Trust documents (if applicable)
It is also a good opportunity to make sure account beneficiaries are updated and aligned with your current wishes.
Think About the Lifestyle Side of Retirement
Retirement planning is not only financial. Many people spend years focused on saving for retirement without spending much time thinking about what retirement will actually look like day to day.
Questions worth considering:
- How do you want to spend your time?
- Do you plan to travel?
- Will you work part-time or volunteer?
- Are you staying in your current home?
- What routines, hobbies, or relationships are important to you?
The transition into retirement often feels smoother when there is purpose and structure alongside the financial plan.
Retirement Planning Is More Than a Date on the Calendar
The year before retirement can bring excitement, uncertainty, and plenty of important decisions. Having a thoughtful checklist, and a plan behind it, can help create more clarity as you prepare for this next chapter.
At LincolnBridge Financial Planning, we help individuals and families navigate retirement with personalized financial planning designed around their goals, values, and long-term vision.
Frequently Asked Questions
What should I do one year before retirement?
A year before retirement is a good time to review your income plan, investment strategy, healthcare coverage, Social Security timing, taxes, and expected retirement expenses. It is also helpful to revisit estate planning documents and lifestyle goals.
How much cash should I have before retiring?
The right amount depends on your overall financial picture, spending needs, and comfort level. Many retirees choose to maintain accessible cash reserves for short-term expenses and emergencies.
Should I pay off debt before retirement?
Some people prefer entering retirement with minimal debt, while others prioritize liquidity or investment flexibility. The right approach depends on interest rates, cash flow, and long-term goals.
When should I start Social Security?
Social Security timing depends on many factors, including your income needs, health, marital situation, and retirement goals. Reviewing different claiming strategies can help you better understand your options.
What happens if the market drops right before I retire?
Market volatility is a normal part of investing, which is why reviewing your allocation, cash reserves, and income strategy before retirement is important. A well-structured plan is designed to account for changing market conditions over time.
The commentary on this website reflects the personal opinions, viewpoints and analyses of the LincolnBridge Financial Planning, LLC employees providing such comments, and should not be regarded as a description of advisory services provided by LincolnBridge Financial Planning, LLC or performance returns of any LincolnBridge Financial Planning, LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. LincolnBridge Financial Planning, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.