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Retirement can feel both exciting and overwhelming. For many people in their late 50s or early 60s, the question is not only when to retire but also how to retire with confidence. You have likely spent decades working, saving, and planning. Yet as you approach the final stretch, the decisions you make now will shape the next 20 to 30 years of your life.
This five-step pre-retiree checklist is designed to help you assess your readiness between the ages of 55 and 62. It covers the core areas of retirement planning: income, Medicare, taxes, debt, and legacy. By reviewing each area carefully, you can create a more secure and thoughtful plan for your future.
Step 1: Build a Reliable Retirement Income Plan
A retirement income plan is the foundation of your financial future. It determines how you will replace your paycheck once you stop working.
Identify Guaranteed Sources of Income
• Social Security benefits: Estimate when you will claim and how timing affects your monthly benefit. Waiting until full retirement age or later may increase the amount you receive each month [1].
• Pensions or annuities: Review any employer pensions or annuity contracts you hold. Understand payout options such as single life versus joint life.
Estimate Your Spending Needs
Projecting expenses in retirement helps you evaluate whether your income sources will cover your lifestyle. Consider:
• Day-to-day living costs (housing, utilities, food)
• Healthcare and insurance premiums
• Travel, hobbies, and leisure activities
Address the Income Gap
If your guaranteed income sources do not fully cover your projected expenses, identify how to fill the gap. Options include:
• Investment accounts (IRAs, 401(k)s, brokerage)
• Part-time work in early retirement years
• Downsizing or adjusting lifestyle expectations
Step 2: Plan Ahead for Medicare and Healthcare Costs
Healthcare is often one of the most underestimated expenses in retirement. Planning ahead is critical to help avoid surprises.
Know When You Become Eligible
Medicare eligibility begins at age 65. If you retire before then, you will need to arrange coverage through an employer plan, COBRA, or the Health Insurance Marketplace [2].
Understand Medicare Costs
While Medicare covers many healthcare needs, it does not cover everything. Prepare for:
• Part B premiums (which may increase based on income)
• Part D prescription drug coverage
• Medigap or Medicare Advantage plan premiums
• Out-of-pocket expenses like deductibles, co-pays, and dental or vision care
Options for Long-Term Care Protection
Long-term care is not included in standard Medicare coverage. But there are options such as long-term care insurance, hybrid life insurance policies, or earmarked savings [3].
Step 3: Optimize Your Tax Strategy
Taxes do not stop when you retire. In fact, they often become more complex. Planning now can help reduce the tax burden later.
Review Your Account Types
• Traditional retirement accounts (401(k), IRA): Distributions are generally taxable.
• Roth accounts: Withdrawals are typically tax-free if rules are followed.
• Taxable brokerage accounts: Capital gains and dividends may create taxable income.
Consider Roth Conversions
Converting portions of a traditional IRA or 401(k) to a Roth IRA between 55 and 62 may reduce required minimum distributions (RMDs) later. However, this creates taxable income in the year of conversion, so understanding the potential tax impact is key [4].
Watch for Medicare IRMAA Thresholds
Higher income can trigger the Income Related Monthly Adjustment Amount (IRMAA), increasing Medicare premiums. Tax planning helps manage income levels to avoid crossing thresholds unnecessarily [5].
Coordinate Social Security and Taxes
The timing of Social Security benefits affects taxable income. Up to 85% of benefits may be taxable depending on total income [6]. A coordinated plan can help you avoid unnecessary surprises.
Step 4: Manage Debt and Housing Decisions
Carrying debt into retirement can limit flexibility and add stress. Addressing it now can put you in a stronger position.
Pay Down High-Interest Debt First
Focus on credit cards, personal loans, or high-interest lines of credit. These balances can quickly erode retirement savings if not managed.
Evaluate Your Mortgage
Decide whether paying off your mortgage before retirement makes sense. Consider:
• Interest rate versus expected investment returns
• Available cash reserves
• Emotional value of entering retirement debt-free [7]
Balance Liquidity and Debt Repayment
While paying off debt is valuable, avoid depleting all liquid savings. Maintaining an emergency fund ensures flexibility for unexpected expenses.
Step 5: Review Your Estate and Legacy Plan
Estate planning is not just about transferring wealth. It ensures your wishes are honored and reduces burdens on loved ones.
Update Core Documents
• Will: Defines how assets will be distributed
• Power of Attorney: Authorizes someone to make financial decisions on your behalf
• Healthcare Directive: Outlines medical preferences if you cannot speak for yourself
Review Beneficiary Designations
Accounts such as retirement plans and life insurance pass by beneficiary designation, not through a will. Verify designations are current and align with your overall plan [8].
Consider a Trust
For families with complex situations, a trust may provide additional control, privacy, and tax advantages. Consult with an estate planning attorney to determine suitability.
Bringing It All Together
A secure retirement does not happen by chance. It is the result of careful planning and thoughtful decisions across income, healthcare, taxes, debt, and legacy. Between ages 55 and 62, you have the opportunity to address these five steps and build a plan tailored to your needs.
• Income planning helps ensure your paycheck replacement is reliable.
• Medicare and healthcare preparation help you avoid costly surprises.
• Tax strategy can lower your lifetime tax bill and protect Medicare premiums.
• Debt management gives you flexibility and peace of mind.
• Legacy planning helps ensure your wishes are honored and your family is protected.
By tackling these areas now, you can approach retirement with greater clarity and confidence. If you are unsure how these steps apply to your situation, consider meeting with a financial professional who can help design a personalized strategy.
Sources
1. Social Security Administration. "Retirement Benefits." Updated 2024.
2. Medicare.gov. "When does Medicare coverage start?" Updated 2024.
3. American Association for Long-Term Care Insurance. "Long-Term Care Costs." 2024.
4. Schwab. "Should You Consider a Roth Conversion?" 2025.
5. Centers for Medicare & Medicaid Services. "Medicare Premiums: Rules for Higher-Income Beneficiaries." Updated 2024.
6. Internal Revenue Service. "Taxation of Social Security Benefits." Updated 2024.
7. Kiplinger. "Should You Pay Off Your Mortgage Before Retirement?" 2025.
8. Fidelity. "Updating Beneficiaries: Why It Matters." 2024.
Disclosures:
Neither the companies of OneAmerica Financial, Fuller Financial, nor their representatives provide tax or legal advice. For answers to specific questions and before making any decisions, please consult a qualified attorney or tax advisor.
Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. Investing involves risk which includes potential loss of principal. Past performance is not a guarantee of future results.
Guarantees are subject to the claims paying ability of the issuing insurance company.
Not affiliated with or endorsed by the Social Security Administration, the Centers for Medicare & Medicaid Services, or any governmental agency.
This information is not intended to be used – and cannot be used – to avoid penalties under the Internal Revenue Code.
