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Countdown to Retirement

May 23, 2023 | Retirement, Life Events

Woman jogger considering the future and the countdown to retirement

Retirement marks the climax of your career and the beginning of a new chapter in your life.  Making prudent wealth decisions over time helps to establish a solid foundation for your retirement. However, once the countdown to retirement begins, some 5-10 years out from your intended retirement date, it’s time to take a more critical look at your financial readiness.  Here’s what you need to consider during the countdown to retirement.

Estimate Your Retirement Income

You may be transitioning out of the workforce, but there are still various income sources to consider as you countdown to retirement:

Social Security

Your retirement benefits depend primarily upon your earnings history. You can begin receiving retirement benefits early at age 62, but deferring until full retirement age (66 or 67) or up to age 70 increases your monthly benefit payment. If you are, or have been married, you may also be eligible to receive benefits based upon your spouse or ex-spouse’s earning record, which may be higher than your own. View your personal estimated retirement benefits at

Employer-Sponsored Pension Plans

If you participate in an employer-sponsored pension program, ask the administrator for an estimate of your monthly benefit upon retirement, and consider your options regarding a lump sum payout versus regular monthly payments.

Survivor Benefits

If you’re part of a couple, your spouse’s retirement benefits may stop upon their death, unless a survivor benefit is available and elected. Make sure your retirement planning evaluates this consideration as a precaution.

Rental Income

Investment properties you already own can generate streams of income during retirement, or create cash demands due to repairs and vacancies. Make sure to account for realistic rental finances as part of your retirement planning.

Part-Time Employment

You may be able to work part-time during retirement.  However, be aware of any impacts on your Social Security income if you are under your full retirement age.

Individual Retirement Accounts

If you’ve reached the age of having to take Required Minimum Distributions (RMDs), be cognizant of anticipated distribution amounts relative to your cashflow and tax planning. If you’re younger, but at least age 59 ½, you might take elective distributions from your retirement accounts, depending upon your cash needs and tax planning considerations.

Tax Tips:

  • You might be better served by sourcing supplemental income from your traditional savings and investment accounts prior to taking RMDs.  Careful tax planning is important to determine the best account(s) to source income.
  • If you’re charitably inclined, consider making qualified charitable distributions (QCDs) from your retirement accounts, thereby reducing your taxable RMDs.

Analyze Your Living Costs

Determining realistic spending needs and desires both now and as you enter retirement helps to adequately evaluate your readiness.  SageVest actively helps clients to evaluate current and realistic retirement spending as part of our retirement planning efforts.

Develop a Budget

Develop a realistic budget during the countdown to retirement that will position you financially for the future.

Some Expenses Will Decrease

Some work-related expenses might cease or decrease upon retirement.  Your cost of living might also decline if you elect to downsize or move to a lower cost of living area.

Some Expenses Might Increase

Conversely, other costs might increase during retirement, such as travel, entertainment and healthcare costs. If you retire prior to becoming eligible for Medicare benefits, you will likely need to purchase individual health insurance coverage.  Such coverage can be rather expensive.  Once eligible, Medicare covers some costs, but it entails monthly fees plus additional out-of-pocket expenses like deductibles and co-pays.

Non-Recurring Expenses

As part of estimating your cash needs in retirement, don’t forget non-recurring expenses such as for car, home and travel.  Make sure your budget embeds realistic figures, reflecting your true spending and lifestyle.

Long Term Care

Everyone hopes that they will never have a medical event requiring long term care assistance.  However, it is a risk that everyone faces and should evaluate as part of their financial security.  Medicare and Medigap don’t cover extended long term care costs.  As such, any potential expenses must be funded by personal assets or long term care (LTC) insurance.

Outstanding Debt

It may or may not be wise to pay off your mortgage before retirement, depending upon the balance and interest rate.  However, paying down other debts such as home equity loans, student loans for your kids, or credit card debt is wise.

Additional Savings

Your salary will likely peak in the years immediately prior to your retirement, so increase your savings accordingly. Take advantage of tax preferential contributions into retirement accounts, including any employer matches. Remember that you can begin making additional catch-up contributions at age 50.  Higher income earners frequently need to save in excess of retirement plan contribution limits.  Careful retirement planning helps to determine any such needs.

Tax Opportunities

There are a number of tax strategies to consider during the countdown to retirement, and particularly as you enter retirement.  Your taxes often represent your largest budget item.  Proper and proactive planning can significantly improve your retirement opportunities.

Which Retirement Accounts to Draw Down First

The decision of which account(s) and assets to draw on for supplemental income is an important one.  Ultimately, it impacts your taxes and your investment performance.   Your taxable income and age often help to determine whether to source cash needs from your retirement (i.e. IRA) accounts versus your bank or brokerage accounts.

Roth IRA Conversions

Individuals who retire before the age of having to take taxable RMDs often benefit from elective Roth IRA conversions.  Doing so can take advantage of lower tax brackets and create more tax-friendly account structure long-term.

Estate Taxes

If you wish to leave a legacy, planning can help you to identify your likely ability to do so, and tax opportunities to maximize your wealth transfer potential.

Focusing on your finances during the countdown to retirement puts you in a strong position to enjoy an active and fulfilling retirement. SageVest Wealth Management specializes in investment management and retirement planning, always with a proactive tax planning overlay.  Please contact us to find out how we can create a customized, dynamic, and flexible wealth plan that supports your personal retirement goals.

Prepared by SageVest Wealth Management. Copyright .
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The information contained herein is obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed. This article is for informational purposes only. The views expressed are those of SageVest Wealth Management and should not be construed as investment advice. All expressions of opinions are subject to change and past performance is no guarantee of future results. SageVest Wealth Management does not render legal, tax, or accounting services. Accordingly, you, your attorneys and your accountants are ultimately responsible for determining the legal, tax and accounting consequences of any suggestions offered herein.

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Make a wise investment in your future today.