Pre-Retirement Checklist: Tips for How to Prepare for Retirement

Get tips on what to do if you're 10, 5 or 1 year out from retirement.

Pre-Retirement Checklist Graphic

“It feels like only yesterday.” 

How many times have you found yourself saying those words when thinking back on fond memories? For all of us, the daily activities of life, work and family quickly compound and, before we know it, years have seemingly flown by. 

When it comes to thinking about our future, though, our feelings toward time shift. The 10 years that feel like yesterday in our past, can feel far away when they’re in our future. But soon enough, we’ll be at the end of those 10 years wondering where the time went.

For many, those 10 years will lead to retirement. For others, retirement is scheduled to arrive even sooner. Retirement might be as soon as five years, maybe even one. According to a 2018 survey by the Indexed Annuity Leadership Council (IALC), 79 percent of workers surveyed admitted to expressing worry about their retirement.1^Indexed Annuity Leadership Council “Survey of America’s Workforce: A Study of Retirement Readiness by Industry and Occupation” 2018

That’s why having a forward-looking pre-retirement plan is so important. If you’re 10 years or less from retirement, though, getting everything in order may seem daunting. You might not even know where to start.

And you wouldn’t be alone. That same IALC survey also found workers who are unprepared for retirement lack information about retirement planning, with approximately half feeling only a little or not at all informed.1^Indexed Annuity Leadership Council “Survey of America’s Workforce: A Study of Retirement Readiness by Industry and Occupation” 2018


Rather than feel overwhelmed by planning for retirement, it’s easy to put together a game plan in order to be more prepared. It starts with knowing some of the important age milestones that can impact how, and how much, you can save for your retirement:

• 50: The age when you can make additional contributions to your 401(k) or IRA (“catch-up contributions”)2^I.R.C. § 219(b)(5)(B)(i) (2018).
• 59 ½: The age when you can begin withdrawing funds from qualified plans, such as 401(k)s and IRAs, and annuity contracts without incurring a 10 percent penalty (unless an exception applies for early distributions) 3^I.R.C §72(t)(2)(A)(i) (2015).
• 62: Earliest age when you can start receiving Social Security retirement benefits 4^Social Security Administration “Benefits Planner: Retirement” 
• 72: The age when you must begin taking annual distributions from your qualified retirement plans, except Roth IRAs (for individuals born June 1, 1949, or later)5^I.R.C §401(a)(9)(C)(i) (2020). 
Whether you’re 10 years , five years or even one year away from retirement, here are some important tips to help you make sure that you have an effective plan for your future:

10 Years from Retirement

The IALC survey reported workers regretted not saving enough when it came to retirement planning. In fact, 40% of workers surveyed claimed their biggest mistake in retirement planning was not saving earlier.1^ Indexed Annuity Leadership Council “Survey of America’s Workforce: A Study of Retirement Readiness by Industry and Occupation” 2018

Taking a look at what you think you can afford, and when you plan to start your retirement, can also provide some insight. If you’re concerned you won’t be able to retire in the next decade, it might mean revisiting your investment strategies under your company’s 401(k) plan or similar investments and adjusting to prepare better for the future.

During this pre-retirement period, you should consider evaluating all your potential income sources for retirement. The Social Security Administration’s website provides retirement planning calculators that can help you better understand where your needs are now so you can adjust accordingly.

The Social Security Administration also allows you to set up a free account where you can receive personalized estimates of future benefits based on your earnings, get your latest Social Security statements and review your earnings history.6^Social Security Administration “Social Security”

Five Years from Retirement

The lifestyle you plan to have during retirement is also a factor to start considering in the years ahead of your retirement. One in three workers expect to spend more during retirement on their daily expenses than their current expenses, while two-thirds of workers believe they will actually spend less, according to the IALC survey. 1^Indexed Annuity Leadership Council “Survey of America’s Workforce: A Study of Retirement Readiness by Industry and Occupation” 2018

What kind of lifestyle do you want in your retirement and are you financially prepared to pay for it?  According to a 2016 survey conducted by the Bureau of Labor Statistics, total yearly expenses for those surveyed averaged $49,279 for households with people age 55 and older. 7^United States Department of Labor Bureau of Labor Statistics “A closer look at spending patterns of older Americans” 2016

You can calculate your current net worth five years out from your retirement. It’s important to take inventory of your assets and annual expenses so you can identify any gaps between your income and expenses. 

The Bureau of Labor Statistics also stated survey participants reported housing is the greatest expense for households with a person age 55 or older.7^United States Department of Labor Bureau of Labor Statistics “A closer look at spending patterns of older Americans” 2016 Think about where you want to live and what type of house, condo or apartment would be best for you in your golden years; and, remember to calculate that into your expenses.

Health care continues to be one of the dominant expenses for those in retirement. The Lifetime Medical Spending of Retirees report stated people incur an average of $122,000 in medical expenses, including Medicaid payments, between the age of 70 and throughout their remaining years.8^National Bureau of Economic Research “The Lifetime Medical Spending of Retirees” 2018

An important element of that is a plan for health insurance, especially if you retire before 65, which is when Medicare coverage can begin.9^ “Getting started with Medicare”

When you’re five years away from retirement, it’s also a good time to review and update your estate plan, if necessary. Naming or updating the proper beneficiaries on all of your accounts and policies is important.

A survey from senior-care specialists found only 42% of U.S. adults have prepared estate planning documents, including a will or living trust. Meanwhile, 81% of adults 72 or older reported having either a will or living trust.10^ “More Than Half of American Adults Don’t Have a Will, 2017 Survey Shows” 2017

A Power of Attorney (POA) is another important estate planning document to review five years before your retirement. A POA allows you to designate a person to make important decisions on your behalf if you are not able to do so in the future. A financial POA allows you to designate a person to make financial decisions for you and a medical POA allows you to designate a person to make medical decisions for you.

The survey also showed 83% of Americans over the age of 72 have executed a health care power of attorney.10^ “More Than Half of American Adults Don’t Have a Will, 2017 Survey Shows” 2017

It’s important to make sure all necessary legal documents concerning your estate are up to date. Estate planning documents are important legal documents, which should be prepared by a licensed attorney.

One Year from Retirement

Retirement planning might seem overwhelming if you are one year away from retirement age. You’ve spent the last decade making sure your finances and savings are in order. Now’s the time to get ready for a lifestyle change. And for many, that might mean continuing working in some type of professional capacity. As of February 2019, over 20% of Americans aged 65 or older were working or looking for work, double the all-time low of 10% who were in the labor force in 1985.11^United Income, “Older Americans in the Workforce”, Apr., 2019. 

For some, the move to a new profession in post-retirement years can mean opening new doors to stay involved in a new role in a previous workplace, or to explore a passion. A retired teacher might become a substitute for the local school district and a business executive might look into becoming a management consultant.

This is the point where you can choose how you want to earn additional income in retirement. Another important decision to make is how to spend your free time.
Social networks are often built around jobs and professions. It’s important to invest time and resources into physical and mental health and building up a new social network during retirement. 

Preparing to retire means having a complete view of your financial, health and lifestyle goals. While it may seem daunting, a checklist can help keep your tasks in order, especially as your retirement date gets closer. The earlier you start, the more prepared you’ll be. Download our pre-retirement checklist now so you can start preparing for your future, whether retirement is a decade or just months away.


The content is provided for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation, contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact your state insurance department to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.
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