Retirement is a major life transition. After years of earning a paycheck and saving for the future, you suddenly have a new question to answer: How should you manage your finances now that the paycheck has stopped?
The first 12 months of retirement can be an ideal time to review your financial strategy, establish new routines, and make adjustments based on your actual spending. Use this checklist as a starting point.
Months 1 to 3: Establish Your Baseline
□ Track your spending. Keep an eye on where your money is going during the first few months. Your actual retirement expenses may be different from what you projected.
□ Review your income. Identify all sources of retirement income, including Social Security, pensions, investment accounts, and other assets. If you have not yet claimed Social Security, make sure you understand how different claiming ages could affect your benefit. The Social Security Administration provides tools for comparing potential benefit amounts.
□ Review your healthcare coverage. Make sure Medicare, supplemental coverage, or other health insurance is in place and that you understand your premiums, deductibles, and out-of-pocket costs.
Months 4 to 6: Fine-Tune Your Plan
□ Revisit your budget. Once you have several months of real-world spending data, adjust your retirement budget accordingly. Look for expenses that are higher or lower than expected.
□ Review your investment strategy. Your portfolio may need to serve a different purpose now that you are withdrawing money rather than primarily accumulating it. Consider whether your investment mix and withdrawal strategy remain appropriate for your goals and risk tolerance.
□ Check your tax strategy. Retirement can change your taxable income and the way you draw money from different accounts. Discuss withdrawals, estimated taxes, and other potential tax considerations with your financial and tax professionals.
Months 7 to 9: Plan Beyond the Numbers
□ Revisit your goals. Retirement is about more than money. Think about travel, hobbies, family time, volunteer work, and other activities you want your retirement to include.
□ Review your estate documents. Make sure beneficiary designations, powers of attorney, healthcare directives and other important documents reflect your current wishes.
□ Consider unexpected expenses. Review your emergency savings and think about how you would handle a major home repair, medical expense, or other financial surprise.
Months 10 to 12: Conduct a Year-End Review
□ Compare your plan with reality. Look at your income, spending, investments, and savings throughout the year. What worked? What needs to change?
□ Prepare for year two. Use what you learned to establish a sustainable budget and withdrawal strategy for the coming year.
The first year of retirement does not have to be perfect. Think of it as a learning period. Regular reviews can help you make informed adjustments and build greater confidence as you move into the next chapter.
We can help you conduct a review of your long-term financial plan at any time, and we can also guide your decisions after you retire. Stay in touch with us during your first year of retirement and beyond, and together we’ll work to keep your plans on track.