Retirement Readiness Checklist: 8 Steps You Need to Take

The Social Security Administration defines full retirement age between 65 and 67, depending on your year of birth. Your employer may say something different. Deciding when to retire is one of the hardest decisions you’ll have to make. Retire too late and you may not have the energy to enjoy it. But if you retire too early, you could end up in financial trouble. A financial advisor can help you put a financial plan together for your retirement. Here’s a checklist with eight things that will help you determine your retirement readiness.


1. Take Inventory of Your Assets

Before you can make a plan, or check on your progress, you need to first figure out where you stand financially. Evaluate your current budget and write down every debt, liability, savings balance, income stream, and insurance policy you have. Don’t forget about properties, vehicles, and other valuable possessions that affect your bottom line. A good way to do this is by creating a worksheet that you can adjust on a regular basis. This process will allow you to assess your current financial situation and plan accordingly.

As you review, keep in mind that you won’t be getting a paycheck once you retire. Experts often say you’ll need at least $1 million to retire comfortably, but Bureau of Labor Statistics records show that the average American age 55 or older spent $67,192 in 2020 ($48,872 for those 65 and older). Whichever benchmark you use, it will at least give you something to measure your current status against.


2. Build an Emergency Fund

Before you make any major financial decision, you’ll want to be sure you’re protected should things not go according to plan. Hopefully, you aren’t learning about emergency funds for the first time when you’re within years of retirement. But if you have somehow gotten this far without a financial security blanket, now’s the time to create one. It will cover you in the event of a personal catastrophe, and it can also make up for delays in the start date of your pension or Social Security.

Some experts recommend that you sock away three months of living expenses, while others suggest you save enough for at least a year. Six months’ worth of funds should be enough to cover you in case of emergency. Base the amount of this six-month fund on your expenses, not your income. No matter your current state of employment, this fund is about how much you’re spending. Remember to include expenses currently covered by your employer, like healthcare, because your emergency fund will need to transition into retirement with you.

Keep your fund somewhere safe and separate from your other savings so you aren’t tempted to spend it. A passbook savings or money market account could be a good option. They’re liquid in case you need to access your funds but still earn interest. Before making a decision you should learn more about the best places to put your emergency fund.


3. Eliminate All Debt

In an ideal world, we’d all enter retirement without any debt. Since your income is likely to decrease, any fixed payments will start to take up a larger share of your expenses. If you’re nearing retirement, it’s time to take a look at the debt column of your inventory. Add interest rates and terms in a new column beside your outstanding debts.

So, how should you tackle your debts? There are generally two thoughts on where to start: either by paying down debts with the smallest balance or debts with the highest interest rates. If you can stomach it, we suggest starting with the highest-interest-rate debts. This is usually credit card debt, followed by personal loans and car loans. And we don’t just mean hitting the monthly minimum.

To really make a dent, you’ll have to put as much money as you can into paying down your priority debt without sacrificing making the minimum payments on other debts. Mortgages are a good debt to save for last as these tend to have low-interest rates.

No matter what repayment strategy you choose, the most important thing is sticking with it. Map it on a calendar, track your progress and ask a friend or family member to keep you accountable. Any time you successfully pay off a debt, give yourself a small reward to stay motivated.


4. Determine Your Retirement Needs

Before you can retire, you have to decide how you want to retire. Consider where you want to live, whether you’ll have a job (this may sound crazy, but some people like to work in retirement), and what your expenses will be. Try to be realistic in terms of retirement length, too. This can be difficult to predict, but you can always refine your estimate down the line.

You should also create a timeline to show when different streams of income will begin. This will help you manage cash flow and determine how much you need to save to retire. Look to your Social Security account, employer-sponsored retirement accounts, individual retirement accounts, and, for some, wages and a pension. Be sure you’re thinking of each income in post-tax dollars, as many retirees fail to factor in taxes.

See how your pre-and post-retirement budgets compare. The more realistic you are, the better prepared you can be. If you need help building or vetting your plan, you can find a financial advisor to help.


5. Square Away Your Health Insurance

Healthcare is one of the biggest expenses you’ll face in retirement. According to the Bureau of Labor Statistics’ Consumer Expenditure Survey, healthcare for those aged 55 to 64 cost $5,820 in 2020 ($6,749 for those aged 65 and over). Don’t feel bad if this means you have to make a quick adjustment to Step 4.

In addition to factoring these expenses into your budget, you’ll also want to consider where you’ll be getting health insurance coverage. If you retire at or after the age of 65, you can largely rely on Medicare for your retirement needs. You can get an overview of Medicare’s coverage and costs at the official site. Pay special attention to anything you need that isn’t covered. Some people like to have a supplemental insurance plan.

Things get trickier – and more expensive – if you plan to retire early. If you don’t receive health insurance from your former employer or through your spouse’s employer and don’t yet qualify for Medicare, you’ll have to get health insurance on your own. Whatever your situation, just make sure your insurance doesn’t lapse when you need it most. Know the terms and conditions of your coverage as well as how much you can expect to pay in premiums, deductibles, co-pays, and out-of-pocket costs.


6. Plan Out Your Estate 

No one likes to think about their demise, but as you are near retirement, you’re also really getting closer to the end of your life. Being prepared with an estate plan will ensure your family is not plagued with financial burdens after you’re gone and that your money is dispersed according to your desires.

In addition to creating a will, you’ll need to assign a power of attorney and healthcare proxy to make decisions on your behalf should you become incapacitated. You’ll also need to establish guardians for living dependents and appoint beneficiaries on life insurance plans, retirement accounts and shared assets. Consider taxes here too, as you don’t want your estate bequeathed to the IRS. You can also craft a letter with any information that hasn’t been accounted for, like desired funeral arrangements or dissemination of sentimentally valuable family heirlooms.

Ensure all documents are properly notarized and stored somewhere safe. Include an inventory of personal data like your Social Security number, date of birth, bank account numbers, insurance policy numbers and digital passwords to keep things organized and easy to access. After you’ve created your plan, remember to review it at least every five years or whenever you experience a life-changing event.


7. Investigate Your Retirement Investing Needs

It’s never a bad thing to have more income. One of the worst mistakes American workers make is designing their investment portfolio around their retirement date. This leaves little earnings potential for their post-retirement life. Investigating how retirement investments could supplement your retirement account earnings might be beneficial for many looking to extend how long their total amount saved will last.

Keep in mind that your risk tolerance may change as you age and stop earning a paycheck. You may want to employ a total return portfolio that allows you to withdraw a certain percentage while working toward a long-term rate of return, but that isn’t your only option. Retirement income mutual funds, government bonds, real estate, closed-end funds, dividend income funds, and annuities are all good options for retirees. The more you know, the better you can decide which option is right for you.


8. Learn How to Withdraw Funds and Reduce Taxes

You’ve, hopefully, spent your entire adult life investing money into your retirement accounts, so it may seem crazy that it’s finally time to take it out. Of course, you’ll have to understand how to do this first.

If you have an employer-sponsored plan, figure out if you want to leave money there or roll it into an IRA account. Consolidating is probably the better option if you’re over 59.5. At this time, you can take money out of your retirement accounts without incurring an early withdrawal penalty. By 70.5, the law requires you to take required minimum distributions (RMDs). You should make your decision based on what’s both tax-efficient and what you and your family feel most comfortable with. You can work with the institution that manages your funds to figure out how withdrawals work.

Next, you’ll have to decide when to sign up for Social Security. Most experts suggest you wait to sign up until full retirement age so you can receive full benefits, but you can sign up anytime between the ages of 62 and 70. The longer you wait, the bigger your check will be. You can apply for Social Security online, by phone, or in-person at a local Social Security office.


Bottom Line

Retirement can be a wonderful time where you can finally enjoy some of the things you’ve been planning for a long time. You can travel, enjoy family, or spend more time on your hobbies. However, these things are only available if you’re financially prepared for retirement. It’s important to plan ahead and make sure you check in on your retirement plan routinely to make adjustments as needed.

Contact us if you would like a complimentary risk assessment of your 401k or any other portfolio you may have.


This article is provided for informational purposes only and should not be construed as tax advice. Consult your tax professional.



Philip Lockwood | Founder + Managing Partner

Address | 1501 Ingersoll Ave Ste 201 Des Moines, IA 50309

Phone | 515-274-8006

Email |

Website |

Securities offered through Parkland Securities, LLC, member FINRA ( and SIPC ( Investment Advisory services offered through SPC, a Registered Investment Advisor. Lockwood Financial Strategies, LLC is independent of Parkland Securities, LLC and SPC

Securities offered through Parkland Securities, LLC, member FINRA/SIPC.