A solid pre-retirement checklist helps you confirm your income plan, limit tax surprises, and make sure your accounts and insurance line up with your retirement date. The real goal is simple: take scattered pieces and turn them into one clear plan with the next steps you can actually follow.
Five years out is a strong planning window. You still have time to adjust savings, tighten your budget, review risk, and prepare for key deadlines, including Medicare enrollment and Social Security timing, without the pressure that comes in the final year.
Key Takeaways
- Know your retirement spending number.
- Map income sources and timing.
- Stress test for market drops and inflation.
- Build a tax-aware withdrawal plan.
- Confirm healthcare, estate documents, and beneficiaries.
Start with your retirement date and spending target
Every checklist starts with a target retirement date. Once you have that, you need a realistic picture of what your life will cost. Planning gets much easier when you can answer one question: “How much income do we need each month to live the way we want?”
Estimate baseline monthly needs
Begin with fixed, required expenses. These are the bills you still have to pay, even in a rough market year. Think of this as the “floor” of your retirement income plan.
Common baseline categories include:
- Housing costs (mortgage or rent, property taxes, HOA, repairs)
- Utilities, phone, and internet
- Food and household basics
- Transportation (insurance, gas, maintenance)
- Insurance premiums (health and other coverage)
A practical approach is to review the last 6 to 12 months of spending and sort it into “needs” and “wants.” It does not need to be perfect; it just needs to be honest.
List “wants” like travel and hobbies
Retirement is not only about covering the basics. It’s also about using your time the way you want.
Start by listing the lifestyle items you hope to fund, then estimate what each may cost each year:
- Travel
- Hobbies, sports, and memberships
- Dining out and entertainment
- Family support or gifting (if that is part of your plan)
- Home projects
This step helps prevent a common issue: people plan well for necessities, but underestimate lifestyle spending in the early “go-go” years.
Build a buffer for surprises
Inflation and healthcare costs can push spending higher over time. Many people add a buffer, often 10% to 20%, so the plan has breathing room. This is meant to protect you from real-life surprises, not encourage extra spending.
Inventory your accounts and benefits
Most households have retirement money spread across multiple places. Pulling everything together now helps you avoid missed details later and makes it easier to build a coordinated withdrawal plan.
401(k), IRA, Roth, brokerage, bank savings
List every account and include:
- The institution
- The account type, such as 401(k), Traditional Individual Retirement Arrangement (IRA), Roth IRA, brokerage, bank savings, and HSA, if applicable
- The approximate balance
- A simple note on how it is generally taxed (taxable, tax-deferred, potentially tax-free)
This helps you spot overlap, like old 401(k)s invested in similar funds or a portfolio that is more concentrated than you realized.
Social Security estimate
Create or log in to your my Social Security account to access your Social Security Statement, verify reported earnings, and review benefit estimates.
Checking your earnings record matters because your benefits are based on your lifetime earnings history.
Pension choices (if applicable)
If you have a pension, request the latest benefit estimate and review your payout options. Some plans offer a lifetime monthly benefit, while others may offer a lump sum. The right choice depends on cash flow needs, survivor goals, taxes, and how the pension fits into your overall plan.
Build an income plan you can follow
An income plan shows where your retirement “paycheck” comes from each month. Without a written plan, retirement can feel uncertain, even when savings are strong.
What pays the bills in your first year of retirement
Your first year often includes the most change, including leaving work, shifting health coverage, and setting up withdrawals. Because of that transition, many retirees create a clear “year one” funding plan so they are not forced to sell long-term investments at the wrong time.
How much comes from Social Security or a pension
Social Security and pensions can provide a steady income and reduce how much you need to withdraw from investments. Social Security can be claimed as early as 62 (with reductions for claiming early), and benefits can increase when delayed past full retirement age up to age 70.
What you withdraw from investments and when
The order you pull from accounts can affect taxes and Medicare premiums. A common approach is to map withdrawals year by year instead of guessing, especially if you have a mix of taxable, tax-deferred, and Roth accounts.
Also, keep required minimum distributions (RMDs) on your radar. The Internal Revenue Service (IRS) explains that many people must begin RMDs for IRAs when they reach age 73 or age 75. Your first required distribution deadline is generally April 1st of the year following the year you reach that applicable age.
Plan for a market drop before retirement
A market drop near retirement can be disruptive, as withdrawals may begin around the same time. Planning ahead helps you build flexibility so short-term volatility does not force long-term decisions.
Cash reserve and short-term needs
Many retirees keep a cash cushion, often 6 to 24 months of planned spending, to reduce the chance of selling investments during a downturn. The right amount depends on guaranteed income, spending needs, and comfort level.
Risk check and rebalancing plan
Five years out is a good time to confirm whether your current risk level still matches your timeline. A rebalancing plan helps you manage risk consistently, instead of reacting emotionally.
Avoid big changes based on headlines
Headlines are built to grab attention, but retirement plans are built to keep you steady. If you feel tempted to make a major change, come back to your written plan and long-term goals to stay grounded.
Reduce tax surprises
Taxes can be one of the largest ongoing expenses in retirement. Building a tax-aware plan helps you estimate take-home income more accurately and avoid unnecessary surprises later.
Which accounts create taxable income
In general:
- Traditional IRAs and 401(k)s are typically taxed as ordinary income when withdrawn.
- Taxable brokerage accounts may create taxes through capital gains, dividends, and interest.
- Roth withdrawals can be tax-free if they meet IRS rules, but the details matter.
The key is knowing which accounts raise taxable income so you can withdraw with intention.
What higher income can change (Medicare and brackets)
Higher income does not just affect your tax bracket. It can also increase your Medicare premiums through income-related monthly adjustments (often called IRMAA) for Part B and Part D. Medicare explains how these income-based adjustments work and how notices are issued through Social Security.
Year-by-year tax planning before retirement
Five years out is often when year-by-year planning becomes especially valuable. Small moves, done at the right time, can lower future taxes. Some retirees explore Roth conversions (when appropriate), coordinate the timing of Social Security, and plan around RMDs.
Confirm healthcare and insurance
Healthcare is a major variable in retirement, which means the costs and timing of coverage decisions can affect both your budget and your tax plan.
Medicare timeline (if close to 65)
Medicare’s Initial Enrollment Period (IEP) is generally a 7-month window. It begins 3 months before you turn 65, including your birthday month, and ends 3 months after.
As enrollment timing matters, missing required windows can lead to late enrollment penalties. Medicare explains that the Part B late enrollment penalty can increase premiums by 10% of the standard premium for each full 12-month period you were eligible but did not enroll.
Long-term care planning basics
Long-term care planning prepares you for the possibility of home health care, assisted living, or nursing care. Many people start by choosing an approach, such as:
- Using insurance (if it fits the plan and budget), or
- Setting aside assets and building flexibility into the plan (“self-insure”)
This is a personal decision, but it should still be intentional and informed.
Life insurance and liability review
As retirement gets closer, you must review:
- Whether you still need life insurance and what purpose it serves; and
- Whether your liability coverage still fits your assets and risk
Many policies were selected for a working-life stage and may need updating.
Update estate basics and beneficiaries
Your retirement plan should also cover, “What happens if I am no longer here?” and “Who can step in if I cannot manage things myself?” Addressing these questions helps you protect your wishes and reduce uncertainty for the people you care about.
Beneficiary check (IRA, 401(k), life insurance)
Beneficiary forms matter because they often control who receives assets. Review beneficiaries across retirement accounts and insurance policies to make sure they match your current wishes and estate documents.
POA and healthcare directives
A durable power of attorney and healthcare directives allow someone you trust to make financial and medical decisions if needed. Having these in place provides clarity and protection for your family.
Coordinate with an attorney
A financial advisor and estate attorney can work together to confirm account titling, beneficiary alignment, and how assets should transfer. Coordinating these details now can reduce confusion and delays later.
What to bring to a retirement planning meeting
If you meet with a professional, bring:
- A one-page summary of your assets (account types and balances)
- Your Social Security Statement and earnings record review
- A basic budget (needs, wants, and a buffer)
- Your most recent tax return
- Insurance policy summaries
- Any estate documents you already have (will, trust, POAs)
FAQs
You are generally on track if your reliable income (like Social Security and a pension, if applicable), combined with a sustainable withdrawal plan from savings, can cover your projected monthly expenses, taxes, and healthcare costs, with a reasonable buffer. It also helps to stress test the plan for scenarios like a market downturn or higher-than-expected inflation.
Start by listing every account in one place, and then decide whether simplification would help. Some people consolidate old 401(k)s into an IRA (or into a current employer plan, if allowed) to make tracking easier and help coordinate future RMDs.
It depends on your interest rate, cash flow, and comfort level. Paying it off can lower your monthly “floor” of expenses, while keeping it may preserve liquidity and flexibility. The right decision is the one that supports your written income plan and stress test.
A common approach is holding 6 to 24 months of spending in cash or highly liquid accounts, so you are less likely to sell long-term investments during a down market. The best amount depends on your guaranteed income and how predictable your expenses are.
Start at least five years before retirement so you can coordinate claiming timing with your tax plan and withdrawal plan. Social Security explains that claiming early can reduce benefits, and delaying past full retirement age can increase benefits up to age 70.
Common mistakes include taking more risk than they realize, not having a clear first-year withdrawal plan, delaying Medicare planning, and not understanding how retirement income will be taxed. Medicare enrollment timing and penalties are also important to get right.
An annual review is common. You should also review your plan after major life changes (job change, health event, marriage/divorce, death in the family) and after major market moves.
Bring your recent tax return, account statements, Social Security estimates, and a list of monthly expenses. You can access your statement and verify earnings using a my Social Security account.
Ready to turn this checklist into a clear plan?
If you are within five years of retirement and want a second set of eyes on your plan, Bauman Wealth Advisors can help. You can schedule a complimentary consultation with one of our CFP® professionals to review your retirement spending target, income sources, tax strategy, and key deadlines like Medicare and Social Security. We do retirement so you can do life.
