The Ultimate Retirement Readiness Checklist: Are You Prepared?

You've been counting down to retirement for years. Maybe you've even picked a date. But as that date gets closer, a different feeling starts creeping in: uncertainty.

Have you saved enough? When should you claim Social Security? What about healthcare before Medicare kicks in? And that estate planning you've been putting off?

You're not alone. Many Americans approaching retirement feel confident about some aspects while harboring serious doubts about others. The good news is that retirement readiness isn't a mystery. It's a checklist, and you can work through it systematically.

This retirement planning checklist covers seven critical areas that determine whether you're truly ready to retire. Some you've probably handled. Others might reveal gaps you need to address. Either way, you'll finish this article knowing exactly where you stand.

Before anything else, you need clarity on whether your financial foundation supports retirement. This isn't about reaching some magic number you read in an article. It's about understanding your specific income sources and expenses.

What to assess:

• Total savings across all accounts: Add up your 401(k), IRAs, taxable investment accounts, and any other retirement savings
• Annual expenses: Track your current spending, then estimate retirement expenses (which may be lower or higher depending on your plans)
• Guaranteed income sources: Calculate expected Social Security, any pension payments, rental income, or annuities
• The gap: Your expenses minus guaranteed income equals what your savings need to cover

Many financial planners suggest that your savings should be able to generate enough income to cover this gap. A common starting point for evaluating this is the 4% rule, though your personal situation may call for adjustments.

If you discover a gap that concerns you, several options exist: delay retirement by a year or two, reduce planned spending, consider part-time work in early retirement, or optimize your withdrawal strategy. A qualified financial adviser can help you model different scenarios and identify which approach makes the most sense for your circumstances.

If you're planning to retire before age 65, healthcare might be your biggest blind spot. Medicare doesn't begin until you turn 65, and employer coverage typically ends when you leave your job.

Healthcare options before Medicare:

• COBRA continuation coverage: Extends your employer plan for up to 18 months, but you pay the full premium plus a 2% administrative fee (often $600-900+ monthly for individual coverage)
• Marketplace plans: Individual plans through Healthcare.gov or state exchanges, with potential subsidies based on income
• Spouse's employer plan: If your partner is still working, you may be able to join their coverage
• Retiree health benefits: Some employers offer this, but it's increasingly rare

The costs can be substantial. According to data from healthcare.gov, the average marketplace premium for a 60-year-old can range from several hundred to over $1,000 per month before subsidies, depending on location and plan type.

Once you turn 65, you'll need to enroll in Medicare. The process involves several decisions: Original Medicare versus Medicare Advantage, whether to add Part D prescription coverage, and whether you need a Medigap supplemental policy. Our Medicare 101 guide walks through these choices in detail.

Action item: Price out your healthcare options for the years between retirement and Medicare eligibility. Include this amount in your retirement budget, as it can significantly impact your required savings.

You can claim Social Security as early as 62 or as late as 70, and when you claim dramatically affects your lifetime benefits. This is one area where the right strategy can mean tens or even hundreds of thousands of dollars over your retirement.

The basic math:

• Claiming at 62: Your benefit is reduced by approximately 30% compared to your full retirement age benefit
• Claiming at full retirement age (66-67, depending on birth year): You receive 100% of your calculated benefit
• Claiming at 70: Your benefit increases by 8% for each year you delay past full retirement age, up to age 70

For a married couple, the claiming strategy becomes even more complex and potentially more valuable. Spousal benefits, survivor benefits, and the interaction between two claiming ages create multiple scenarios to consider. We explore these strategies in depth in our article on maximizing Social Security for married couples.

Key factors that influence timing:

• Your current health and family longevity
• Whether you plan to work in your early 60s
• Your other income sources and tax situation
• Survivor benefit considerations for your spouse
• Whether you need the income immediately or can afford to wait

Many people benefit from delaying Social Security while drawing down retirement accounts first. This approach can provide higher guaranteed lifetime income later while potentially reducing future required minimum distributions and taxes.

Action item: Create your personal Social Security account at ssa.gov to review your earnings history and estimated benefits. Consider meeting with a financial adviser to model different claiming strategies for your household.

Many people are surprised to discover that retirement doesn't mean the end of taxes. In fact, without proper planning, you might face higher tax rates in retirement than you expect.

What gets taxed in retirement:

• Traditional 401(k) and IRA withdrawals: Taxed as ordinary income at your marginal rate
• Social Security benefits: Up to 85% may be taxable depending on your combined income
• Investment gains and dividends: Taxed at capital gains rates (0%, 15%, or 20%)
• Roth accounts: Qualified withdrawals are tax-free
• Pension income: Generally taxed as ordinary income

The order in which you withdraw from different account types can significantly impact your tax bill over retirement. One commonly discussed approach involves drawing from taxable accounts first, then tax-deferred accounts, and finally Roth accounts, though your optimal strategy depends on your specific tax situation.

Required Minimum Distributions (RMDs): Starting at age 73 (for those turning 72 in 2023 or later), the IRS requires you to withdraw minimum amounts from traditional IRAs and 401(k)s annually. These withdrawals are taxed as ordinary income and can push you into higher tax brackets if you're not prepared.

Some retirees consider strategies like Roth conversions in the years between retirement and RMD age, when they may be in lower tax brackets. This involves converting traditional IRA funds to Roth IRAs, paying taxes now at potentially lower rates to create tax-free income later.

Action item: Map out where your retirement income will come from each year and estimate the tax implications. A tax professional or financial adviser can help you develop a withdrawal strategy that minimizes lifetime taxes.

Estate planning sounds like something only wealthy people need. That's a dangerous misconception. Every adult needs basic estate documents, and they become especially important as you approach retirement.

Essential documents you need:

• Will: Specifies how your assets should be distributed and names guardians for minor children
• Financial power of attorney: Allows someone you trust to manage financial matters if you become incapacitated
• Healthcare power of attorney: Designates someone to make medical decisions on your behalf if you cannot
• Living will (advance directive): Documents your wishes for end-of-life medical care

Beyond the basics, some people also benefit from trusts, which can help with estate tax planning, avoid probate, or provide for special needs dependents. The federal estate tax exemption is quite high (over $13 million for individuals in 2024), so many families won't face federal estate taxes, though some states have lower thresholds.

Review beneficiary designations: Your 401(k), IRAs, life insurance, and other accounts pass directly to named beneficiaries, bypassing your will entirely. Review these designations regularly to ensure they reflect your current wishes, especially after major life events like marriage, divorce, or the birth of children.

Our comprehensive guide to estate planning basics covers these documents in more detail and explains when you might need more sophisticated planning.

Action item: If you don't have these documents, schedule a meeting with an estate planning attorney. If you created documents years ago, review them to ensure they still reflect your wishes and comply with current laws.

Numbers tell you whether you can afford to retire, but they don't tell you whether you'll be happy in retirement. That requires a different kind of planning.

Questions to answer before you retire:

• Purpose and identity: What will give your days meaning without your career? Many people underestimate how much their work provides structure and social connection
• Activities and hobbies: How will you fill 2,000+ hours per year that work currently occupies?
• Social connections: Will you maintain your work friendships? Do you have a social network outside of work?
• Location: Will you stay in your current home, downsize, relocate, or split time between locations?
• Phased approach: Would you prefer to transition gradually, perhaps through part-time work or consulting?

Some people transition successfully by developing hobbies, volunteering, taking classes, or pursuing passion projects they never had time for during their working years. Others find fulfillment in working part-time in retirement, which also provides additional income and social engagement.

Research on retirement satisfaction consistently shows that people who have a clear sense of purpose and maintain social connections report higher happiness levels. The financial aspects of retirement get most of the attention, but these lifestyle factors often determine whether retirement feels like freedom or aimlessness.

Action item: Write down how you envision a typical week in retirement. Be specific about activities, social interactions, and what would make you feel fulfilled. If the picture seems vague or unappealing, you may need more lifestyle planning before you retire.

You've spent decades accumulating retirement savings. Now you face a different challenge: spending it down in a way that balances enjoying your retirement with making your money last.

Key elements of a withdrawal strategy:

• Sustainable withdrawal rate: How much can you safely withdraw annually? The 4% rule suggests withdrawing 4% of your initial portfolio value (adjusted for inflation), though your personal situation may warrant a different approach
• Account sequencing: Which accounts do you withdraw from first to optimize taxes?
• Market volatility management: How will you handle withdrawals during market downturns to avoid selling low?
• Spending flexibility: Can you reduce expenses in down years to preserve your portfolio?

One risk that often gets overlooked is sequence of returns risk, particularly in early retirement. If you experience poor market returns in your first few years of retirement while simultaneously withdrawing funds, it can significantly impact how long your portfolio lasts. Some strategies to manage this include maintaining a cash buffer, reducing withdrawal amounts in down years, or maintaining some flexibility to return to work if needed.

The traditional model of steady withdrawals adjusted annually for inflation may not match your actual spending patterns either. Research suggests that many retirees spend more in early retirement (the "go-go years"), less in middle retirement (the "slow-go years"), and potentially more again in late retirement due to healthcare costs (the "no-go years").

Action item: Model different withdrawal scenarios using retirement planning tools or work with a financial adviser to develop a withdrawal strategy that accounts for your specific situation, including your income sources, tax situation, and spending patterns.

Retirement readiness isn't a single yes-or-no question. It's a series of specific questions across multiple domains. You might be extremely well-prepared in some areas while having significant gaps in others.

Use this quick assessment:

Give yourself one point for each statement that's true:

• You know your total retirement savings and expected annual expenses in retirement
• You have a healthcare plan for any gap years before Medicare eligibility
• You've decided when to claim Social Security (or have modeled different scenarios)
• You understand the tax implications of your retirement income sources
• You have essential estate documents (will, powers of attorney) in place and up to date
• You have a clear vision for how you'll spend your time and find purpose in retirement
• You have a withdrawal strategy that accounts for taxes, longevity, and market volatility

Your score:

• 6-7 points: You're in strong shape. Focus on fine-tuning your plans and staying up to date with regulatory changes
• 4-5 points: You're making progress but have some important gaps to address before retiring
• 1-3 points: Significant planning work remains. Consider postponing retirement until you've addressed these areas
• 0 points: Start with the financial foundation and healthcare planning, then work through the other areas systematically

Remember, discovering gaps now is far better than discovering them after you've already retired. Every item on this retirement readiness checklist represents something you can address with proper planning and guidance.

Working through this retirement readiness checklist probably raised as many questions as it answered. That's normal and actually a good sign. It means you're thinking seriously about your retirement instead of simply hoping everything works out.

The areas where you feel uncertain are exactly the areas where you need to focus your planning efforts. For some people, that means getting serious about healthcare planning. For others, it means modeling different Social Security claiming strategies or finally creating those estate documents.

You don't need to have perfect answers to every question, but you do need to address each area thoughtfully. A qualified financial adviser can help you work through the financial and tax aspects, while estate planning attorneys can handle your legal documents. Some areas, like your lifestyle vision, are questions only you can answer.

Disclaimer: The information provided in this article is for educational purposes only and should not be construed as personalised financial advice. We are not registered investment advisers or financial planners. Everyone's financial situation is unique, and what works for one person may not be appropriate for another. Before making any financial decisions, including those related to retirement timing, Social Security claiming, investment strategies, or withdrawal approaches, consult with a qualified financial adviser or tax professional who can assess your individual circumstances.