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Retirement

Retirement planning checklist: Steps you should take

Use Vanguard's retirement planning checklist to ensure you're on track. Find key steps and tips to prepare for a successful and secure retirement.
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As you prepare for retirement, there are several key areas you'll want to consider. Planning ahead can give you greater confidence in your financial readiness while helping address other practical and emotional aspects of retirement.

The good news? Since you're working with Vanguard Advice, you can feel confident knowing that we manage your accounts with your personal goals and timeline in mind. Helping you feel ready to thrive in retirement is at the heart of what we do.

1. Retirement accounts

One of the most important steps as you approach retirement is to take a comprehensive look at your retirement accounts, starting with your 401(k) or other employer-sponsored retirement plans. Spend some time reviewing your account dashboard to see how much you've saved so far and how your investments have performed. This will give you a clearer idea of where you stand and whether you're on track to meet your retirement savings goals.

Vanguard Advice will make gradual adjustments to your holdings, rebalancing your portfolio to grow more conservative as you approach your target retirement date. Shifting toward a higher allocation to fixed income holdings and a lower allocation to equities helps reduce your exposure to market volatility.

If you have IRAs or other accounts you're using to save for retirement, you might consider enrolling these accounts so that they can be managed as well. This gives you the benefit of more comprehensive, proactive planning from Vanguard Advice.

Consolidating your accounts at Vanguard means you'll get simplified reporting from a company you already trust.

Learn how to move accounts to Vanguard

Start your transfer online

2. Retirement income and budget

Once you have a clear view of your retirement accounts and savings outlook, you'll want to estimate your retirement income from all sources. This includes Social Security, investment accounts, pensions, and any other income streams you might have. Knowing how much you can expect to receive each month will help you gauge whether your savings are on track. This, in turn, will help you make informed decisions and set realistic goals.  

Our Retirement Income Calculator can help you determine your expected monthly income in retirement and how it compares to your goal.

Retirement Income Calculator

Next, create a detailed budget for both your monthly and annual expenses. This should include everything from housing and health care to travel and leisure activities. By understanding your income and expenses, you can determine whether you need to make adjustments now to help ensure a comfortable and secure retirement.

Our Retirement Expenses Worksheet makes it easy to create and modify your retirement budget based on different inputs and scenarios.

Calculate your retirement expenses

3. Social Security benefits

For many people, living in retirement marks a major shift in mindset, from accumulating and saving money to drawing from the assets you've accumulated.

Social Security is a key consideration for most retirees. You can start collecting retirement payments as early as age 62, but you'll only receive 100% of your benefit if you wait until your full retirement age, which is 66 or 67, depending on your year of birth. You can increase your benefit by 8% each year you delay past full retirement age, up to age 70—after that there's no added benefit to waiting.

The Social Security Estimator we created for Vanguard Advice lets you explore how collecting your payments at different ages can affect your bottom line. And if you're working with an advisor, you can set up time to talk through different scenarios with them.

4. Withdrawal strategy

It's important to determine your withdrawal strategy, including how much to withdraw each year and which accounts to tap into first. Taking a thoughtful approach can help to reduce your tax burden and enable your retirement savings to last longer. Vanguard Advice will factor in the different account types you own and the tax consequences that apply when withdrawing your assets.

At age 59½, you can withdraw from your IRA and 401(k) without incurring the 10% federal early withdrawal penalty. By law, you must start taking taxable required minimum distributions (RMDs) from most retirement accounts no later than April 1 of the year after the year you reach RMD age. If you don't, you could owe a penalty on the amount you should have withdrawn.

Due to changes to federal law that took effect on January 1, 2023, the age at which you must begin taking RMDs differs depending on when you were born. Calculating RMDs can be tricky, but we can help.

5. Planning for health care

Understanding your health care priorities and matching them to appropriate coverage types can strengthen both your financial and emotional well-being in retirement. Start with a look at what's most important to you when it comes to health insurance coverage (i.e., affordability, plan flexibility, cost predictability).

Because you're enrolled in Vanguard Advice you have access to some powerful tools to help you understand and consider your options regarding health care costs and insurance coverage.

The Health Care Cost Estimator helps you calculate projected health care and long-term care costs based on personal information, preferences, and other factors.

You also have access to our Medicare Match tool, which provides options based on your preferences for affordability, plan flexibility, and more. (Note: you can log in to your account to access these tools).

Here's an overview of some key elements:

Medicare is a federal health insurance program.

Starting 3 months before your 65th birthday, you'll have a 7-month initial window during which you can sign up for Medicare; if you miss it, you may have to pay higher premiums for life. But if you still have medical insurance provided by an employer (including your spouse's employer), you can postpone enrolling in Medicare until that coverage ends without having to pay higher premiums later. Medicare coverage can begin as early as the first day of the month in which you turn 65.

There are several different Medicare options to choose from (referred to as Medicare Parts A to D), each covering different services. Some of them can be combined. It helps to have a strong sense of your personal preferences and health concerns before you identify the policy options that best meet your needs. It's also important to understand the logistics and timelines associated with Medicare enrollment.

Read more about Medicare options

Medigap is Medicare supplemental insurance; it's private insurance that covers some of the out-of-pocket copays and deductibles of Medicare. The 6-month enrollment window for Medigap begins on the first day of the month in which you turn 65. During this enrollment window, you can't be denied Medigap coverage or charged extra because of poor health. But if you miss the enrollment deadline, you may pay higher premiums for life or even be denied coverage.

6. Estate planning

One of the most important steps you can take to feel prepared and confident in your retirement planning is to update your estate planning documents. First, make sure your will and trust are up to date. This ensures that your assets are distributed according to your intentions and can help avoid any unnecessary legal complications.

Next, take the time to review and update your beneficiaries. This includes checking the beneficiaries on your retirement accounts, life insurance policies, and any other financial accounts. This helps to ensure that your loved ones will be taken care of exactly as you intend.

You should also consider appointing a trusted person as your power of attorney for financial management. This person will have the authority to make financial decisions on your behalf if you become unable to do so. Having a trusted person in this role can provide peace of mind and ensure that your financial affairs are managed according to your wishes.

If you're working directly with an advisor, these are all steps they will discuss with you as part of your pre-retirement planning. 

7. Emotional readiness

As you approach retirement, it's just as important to prepare emotionally as it is to prepare financially. One key aspect of emotional readiness is defining your purpose and how you want to spend your time. Start by identifying meaningful activities and goals that bring you joy and fulfillment. Whether it's pursuing a hobby, learning a new skill, or traveling, having a clear sense of purpose can make the transition smoother and more enjoyable.

Another crucial step is to build and strengthen your social network. Retirement can sometimes feel isolating, so it's important to maintain and deepen your relationships with family and friends. Regular check-ins, shared activities, and staying connected can provide a strong support system and keep you engaged.

You might also consider part-time work or volunteering. Not only can these activities keep you active and engaged, they can also provide a new sense of fulfillment and connection.

8. Lifestyle planning

Lifestyle planning is a vital piece of the retirement puzzle, and it's all about making sure your retirement years are as enjoyable and fulfilling as possible. One of the first things to consider is whether your current living situation still fits your needs. Downsizing your home can be a smart move, both financially and practically. A smaller, more manageable space can reduce maintenance and utility costs, and it might even free up some extra cash to put toward your retirement goals.

It's also important to think about how you'll spend your days. Retirement is your chance to explore new activities and hobbies that you've always dreamed of but may not have had time for. Whether it's traveling to new places, picking up a new sport, or exploring a creative pursuit, having a list of activities can keep your days exciting and fulfilling.

Continued learning can be a stimulating and rewarding option, helping you stay mentally sharp and engaged. Many community colleges and online platforms offer courses on everything from photography to coding. By planning your lifestyle thoughtfully, you can ensure your retirement isn't just a break from work, but a satisfying new chapter.

All investing is subject to risk, including the possible loss of the money you invest.

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.

VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.

We recommend that you consult a tax or financial advisor about your individual situation.