8 Financial Moves to Make Before You Retire

If you’re getting ready to retire, you’ll want to make several financial decisions before your last day. How should you invest your savings? What will healthcare cost? When should you claim Social Security? Your decisions about retirement account withdrawals, charitable giving, and Roth conversions could affect how much you keep over the years.

Retirement Planning Checklist

Here are eight financial decisions to review before you retire. Understanding these moving pieces before retirement can help you avoid costly mistakes and build a clear, sustainable plan for the decades ahead.

1. Review Your Investment Allocation

As you get closer to retirement, it’s worth reviewing how much of your portfolio is in stocks. During your working years, you may have focused on growing your investments. Once you retire, you’ll need to think more about managing risk and generating income.

If you’re heavily invested in stocks, gradually increasing your allocation to fixed-income investments may help. Bonds and other fixed-income investments can provide more consistent cash flow and reduce your portfolio’s overall volatility. They can also help cushion some of the effects of market downturns. No allocation is perfect for everyone. The amount you hold in stocks and bonds should reflect your income needs and how much investment risk you’re comfortable taking.

2. Plan for Healthcare Before Medicare

If you’re retiring before age 65, healthcare could be one of your biggest expenses. When you’re working, your employer often pays part of your health insurance premiums. You may not even think much about the full cost because your share comes directly out of your paycheck.

Once you retire, you’ll need to arrange your own coverage. The Affordable Care Act Marketplace lets you compare health insurance plans and see what each one covers. Think of it like Expedia, but for health insurance.

Plans generally come in Bronze, Silver, Gold, and Platinum categories. Bronze plans usually have the lowest monthly premiums but higher out-of-pocket costs. Gold and Platinum plans typically have higher premiums but cover more of your expenses when you receive care. Your household income may also qualify you for premium tax credits that reduce your monthly payments. If you qualify for cost-sharing reductions, choosing an eligible Silver plan can lower your deductibles and copays.

When comparing plans, check whether your doctors are in-network and your prescriptions are covered. Also consider how much healthcare you typically use. A lower monthly premium may not save you money if you end up paying significantly more when you need care.

3. Check Your Medicare Premiums and IRMAA

If you’re 65 or older, consider adding Medicare to your retirement planning checklist. Many retirees are pleasantly surprised by their Medicare coverage. However, higher-income individuals may pay additional premiums through the income-related monthly adjustment amount, or IRMAA.

These surcharges apply to Medicare Part B and Part D. They’re based on income brackets, and going even one dollar over a threshold can move you into the next bracket. Medicare generally uses your income from two years earlier to calculate IRMAA. That can create a problem when you retire because your income may be much lower than it was while you were working. Fortunately, work stoppage is one of the qualifying life-changing events that may allow you to request a reduction. You can submit Form SSA-44 to Social Security with documentation showing that you’ve stopped working and that your income has changed.

A letter from your former employer or other evidence of your retirement may help support your request. Gather as much documentation as you can before applying. Also consider which accounts you’ll withdraw from during retirement. Traditional IRA withdrawals, Roth withdrawals, and taxable investments can affect the income used to calculate IRMAA differently.

4. Review Your Tax Deductions

Retirement can change how much you pay in taxes, especially if you’re leaving a higher-paying job. Recent tax legislation introduced an additional deduction for eligible taxpayers age 65 and older. For tax years 2025 through 2028, qualifying individuals can deduct up to $6,000. Married couples filing jointly may qualify for up to $12,000 if both spouses are eligible.

The deduction begins to phase out when modified adjusted gross income exceeds $75,000 for individuals or $150,000 for joint filers. This is in addition to other deductions you may qualify for, and it’s available whether you itemize or take the standard deduction. Before retiring, compare the deductions you expect to have during your final working year with those you’ll have afterward.

Common itemized deductions include mortgage interest, state and local taxes, charitable contributions, and eligible medical expenses. If your itemized deductions don’t exceed your standard deduction, you generally won’t receive an additional federal income tax benefit from itemizing those expenses. Consider this if you expect your taxable income and deductions to change significantly after retirement.

5. Review Your Charitable Giving Strategy

If you regularly donate to charity, consider whether it makes sense to make larger contributions before you retire. For example, suppose you normally donate $10,000 each year. You might benefit from contributing several years’ worth of donations during a year when your income is higher. A donor-advised fund can help. You contribute cash or appreciated securities to the fund and may qualify for a charitable deduction in the year you contribute. You can then recommend grants to your chosen charities over the following years.

This allows you to make a larger contribution now while continuing to support charities over time. The deduction depends on your circumstances, contribution limits, and other tax rules. Later in retirement, qualified charitable distributions offer another way to give. Once you’re 70½, you can make eligible donations directly from your IRA. These contributions can also count toward your required minimum distributions once those begin.

For smaller donations, there’s another change beginning in 2026. Eligible taxpayers who don’t itemize can deduct up to $1,000 in qualifying cash contributions, or $2,000 for married couples filing jointly. If you regularly give to charity but haven’t tracked smaller contributions in the past, start keeping records so you can claim any deductions you’re eligible for.

SEE ALSO: How Much Money Can I Give To Kids Without Paying Tax?

6. Evaluate Roth Conversions and IRA Withdrawals

The years between retirement and required minimum distributions can offer an opportunity to decide when you’ll pay taxes on your retirement savings. A Roth conversion moves money from a traditional IRA into a Roth IRA. You’ll generally pay income taxes on the converted amount that year, but qualified withdrawals from the Roth IRA can be tax-free later.

Suppose you retire at 65 and won’t need to take required minimum distributions until age 75. In one financial planning scenario, converting enough money each year to fill the 22% tax bracket resulted in projected lifetime tax savings of approximately $63,000. Those savings wouldn’t happen immediately. You would still need to pay taxes on each conversion in the year you make it. The projected savings also depend on future tax rates and the assumptions used in the analysis.

Roth conversions aren’t right for everyone. Another option is to take money from your traditional IRA before required minimum distributions begin. For example, if you’re in the 12% or 22% tax bracket and need money for living expenses, you might consider withdrawing some of your IRA savings while you’re in that bracket. You’ll pay taxes on the withdrawal now, but you’ll also reduce the amount remaining in your IRA. That could lower your required minimum distributions later. The decision comes down to how much income you need today, what tax bracket you’re in, and what you expect your taxes to look like in the future.

SEE ALSO: What Account Should You Spend From in Retirement?

7. Decide When to Claim Social Security

One of the biggest retirement decisions is when to start collecting Social Security. You can generally begin claiming retirement benefits at age 62, but claiming before your full retirement age reduces your monthly benefit. For anyone born in 1960 or later, full retirement age is 67. If you wait beyond full retirement age, your benefit increases by 8% per year through delayed retirement credits until age 70.

For example, if your Social Security benefit at full retirement age is $3,500 per month, claiming at age 62 could reduce it to approximately $2,450. Waiting until age 70 could increase it to approximately $4,340 per month, before future cost-of-living adjustments.

There’s also more to consider if you’re married. Spousal benefits can be worth up to 50% of the higher earner’s benefit at full retirement age. However, the higher earner generally needs to claim their own benefit before their spouse can receive a spousal benefit. Unlike individual retirement benefits, spousal benefits don’t increase through delayed retirement credits after full retirement age. Your health, family history, income needs, and potential spousal and survivor benefits should all factor into the decision.

8. Test Your Retirement Budget

Before you retire, try living on your expected retirement budget for three months. Start with what you think you’ll spend each month. Include groceries, utilities, dining out, entertainment, and other regular expenses. You can keep larger occasional expenses, such as vacations, in a separate travel budget. Track your spending and compare it with your estimate.

After three months, you’ll have a better idea of whether your planned retirement spending is realistic. You may find that certain expenses are higher than expected or that you’re comfortable spending less than you originally planned. That information can help you determine how much income you’ll need from Social Security, investments, and retirement account withdrawals.

Review Your Retirement Planning Checklist Before You Stop Working

Before retiring, look at how these decisions fit together. Your investment allocation affects how you’ll generate income. Your withdrawal strategy can influence your taxes and Medicare premiums. And when you claim Social Security affects how much you’ll need from your savings. Paces Ferry Wealth Advisors helps individuals and families prepare for retirement by reviewing investments, taxes, income sources, and spending needs. Contact us to schedule a conversation to discuss your retirement plan and the decisions you may want to make before leaving work.

Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”). This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.