6 Things to Do If You're Nearing Retirement

If you don't have a retirement plan yet, now is a good time to create one, no matter how young or old you are.

If you do have one, check it at least once a year to make sure it still matches your needs and goals. There are a number of items that could change, such as your retirement date, expected future expenses, savings, investments, and potential income sources.

You can use a retirement calculator to see if you're saving enough. But you'll get more comprehensive and personalized results if you use a robust digital planning tool and/or work with a financial planner or advisor. Getting some extra help can also let you consider a wide range of scenarios, options, and risks, and help you gauge the likelihood of supporting your desired retirement. For example, you can factor in plans to relocate or start a small business in retirement, as well as considering your gift and estate plans, life expectancy, or other personal circumstances.

It's also a good idea to check your investment portfolio at least once a year to be sure it aligns with your plan and still makes sense for you. Things that may change as you near retirement include changes in your cash reserves, tolerance for and ability to manage investment risk, desired asset allocation, diversification of investments, and how often you rebalance your portfolio.

Whether you find yourself in catch-up mode or just want to save as much as you can before you stop working, you have options.

First, if you have an employer-sponsored account—such as a 401(k), 403(b), 457(b), or Thrift Savings Plan—be sure to contribute at least up to the amount your employer will match, and certainly more if you can. In 2025, you can contribute up to $23,500. If you're at least 50 or will be by year's end, you can also make a catch-up contribution of $7,500 (or $11,250 if you're 60-63).

Once you've contributed to your employer account—or if you don't have an employer account—consider contributing up to the maximum amount in a traditional IRA or Roth IRA. Remember, you can also make catch-up contributions to your IRA starting the year you turn 50.

If you're eligible, consider using your Health Savings Account (HSA) to save for future health care costs. For your HSA, catch-up contributions are allowed starting the year you turn 55.

Of course, you can also save in your regular brokerage account. And there's no limit on how much you can save in such accounts.

While you can start taking Social Security as early as age 62, doing so triggers a reduction in your retirement benefit. If you can wait, your future benefit grows. Once you hit "full retirement age" (between age 66 to 67) your Social Security income will increase up to 8% for every year you delay, until you reach age 70. After age 70, there's no upside to delaying.

For most people who are looking ahead to retirement, 67 is "full retirement age," at which point you get your "full" benefit. In formulating your retirement plan, it can be helpful to anchor your thinking on that full retirement date—and not the earlier age 62 date—and build your plan around getting at least the "full" benefit that you earned—and deserve—from Social Security.

Of course, the decision on when to take Social Security depends on your specific situation, including your other income sources, health, and your spouse's needs and circumstances. While there is no correct age for everyone to take it, we generally suggest waiting until you are "full retirement age" (or as old as 70) if you're in good health and can afford to wait, since deferring can pay off over time and provide higher income over a long retirement.

When you're still saving for retirement, it's important to prepare for the taxes you'll end up paying once you reach retirement. While tax laws and tax rates could change before you get there, you can still plan for these unknowns and set yourself up for a more tax-efficient outcome.

One approach is to spread your savings across a variety of accounts with different tax treatments—say, by saving in a pre-tax 401(k), after-tax Roth IRA, tax-advantaged HSA, and a regular taxable brokerage account. With this kind of tax-diversification, you can mix and match withdrawals from your different accounts to better control your taxable income.

For example, here are some suggestions on how to approach tax diversification depending on your current tax bracket: 

- If you're in a lower bracket (0%, 10%, or 12%), consider maxing out your Roth savings, where you pay the taxes up front, because your tax bracket in retirement is likely to be the same or higher than it is today.

- If you're in a middle tax bracket (22% or 24%), it may be more difficult to predict your future tax bracket. Consider splitting your retirement savings between tax-deferred and Roth accounts so you can benefit from both tax treatments. You might also want to consider additional savings in an HSA.

- If you're in a higher tax bracket (32%, 35%, or 37%), your tax rate in retirement is likely to be the same or lower than it is today. It may make sense to maximize your tax-deferred accounts—such as your 401(k), 403(b), 457(b), or Thrift Savings Plan.

Medicare is a big piece of the retirement health care puzzle. But it won't cover everything, and there are out-of-pocket costs. 

Be sure to include the costs of premiums and out-of-pocket expenses in your retirement budget. When Medicare kicks in at age 65, it's reasonable to plan on spending about $200−$850 a month. But where you live, the coverage you choose, inflation, and other personal factors play a role, so consider talking to a financial planner for a more accurate estimate. 

If you're eligible, an HSA can help you save for health care costs before and after you retire. An HSA lets you set aside pre-tax dollars to pay for qualified medical expenses (including Medicare premiums and out-of-pocket costs). Money you save and invest in your account also can grow tax-free, and as long as you use it for qualified medical costs, you won't owe taxes on it. At age 65, you can no longer contribute to your HSA, but you can use any money you've saved in it to pay for qualified health care costs tax-free. After age 65, you can also use the funds for non-medical expenses without a penalty—you'll just owe ordinary income tax.

If you're receiving Social Security at age 65, you'll be enrolled automatically in Medicare Parts A (hospital) and B (medical). If you're not yet receiving Social Security, you'll need to sign up on your own. Keep in mind, Medicare has special enrollment periods, and signing up late can lead to penalties or gaps in your coverage. 

Costs for Medicare include a deductible and coinsurance for Part A, and premiums, deductibles, and coinsurance for Parts B and D. You can also purchase Medigap to help with out-of-pocket expenses using Medicare. Medicare Advantage is another option that covers Medicare Parts A and B, and often includes services original Medicare doesn't cover—like routine dental and vision—through a private company. 

About 60% of people will also need some form of long-term care at some point, and the costs can be high. If you're not sure how you would cover these expenses, a good place to start is a plan that combines three potential sources of help: family support, personal savings, and possibly, but not always, long-term care insurance. For many individuals, family support is the default choice, an assumption that family will naturally be ready and able to help. But this is often the most stressful option and carries its own emotional and economic costs. A more complete approach is to combine family support with personal savings—a topic we've covered a lot already—and insurance.

Long-term care insurance may help cover costs if you or your spouse need in-home care or nursing (because you're unable to perform basic daily activities), or if you need care in a nursing or assisted-living facility.¹ At minimum, it makes sense to complete or update a retirement plan and then stress-test it to see how you would manage potential long-term care costs. Are your current savings enough to cover your potential costs?

Even if retirement is years away, several years before you retire is the best time to start thinking about the steps you'll take when it's time to start living off your savings. After putting money away for so long, many investors are surprised to find they don't have a strategy for converting their savings into a lasting retirement income. But making the shift from saving to paying yourself is critical. At least one to two years before you retire:

- Get to know your retirement income sources, including all retirement, bank, and brokerage accounts, plus other sources of income (such as Social Security, pensions, annuities, or HSA accounts). Some of these sources (e.g., retirement accounts) will involve an account balance, which must be tapped to fund spending. Others (e.g., pensions) may involve regular payments to you. First you need to know when and how you can start taking distributions from each source without a penalty, and how each source will be taxed. 

- Take a close look at your expenses, including money for needs (like food, housing, health care), wants (like travel and entertainment), and wishes (like gifts or a second home). Ask yourself about things like paying off your mortgage or other debts, relocating or downsizing, and how you'll cover health care costs.

- Start planning your retirement income, including a comprehensive strategy for how much you'll spend, how you'll invest, how you'll access your money when you need it, and how you'll stay on track over time. This can be the most complex—and often daunting—step for retirees. To connect all the dots, and do it in a tax-smart way, consider working with a financial advisor, tax professional, or both. Your plan will also help determine how best to stay invested before and during retirement, based on your time horizon, your ability to manage risk, and when you'll need funds. At minimum, for most investors nearing retirement, scaling back modestly and progressively on investment risk by boosting allocations to cash and bonds for a portion of your portfolio (for money you may need soon) makes sense.