7 Critical Steps To Take If You’re Approaching Retirement

Retirement is not a finish line; it is the beginning of a new chapter that ideally offers freedom, purpose and financial security. Yet many people approach retirement without a clear plan. The decisions you make in the years leading up to retirement will determine whether those decades are comfortable and fulfilling. This post outlines seven critical steps to take when you are within ten years of retiring. We weave in quotes from thinkers and financial sages to inspire reflection, highlight common mistakes, and reassure you that Prosperous Living is here to help.

1. Clarify your vision and lifestyle goals

Benjamin Franklin reminded us that “An investment in knowledge always pays the best interest”. Before you crunch numbers, invest time in self‑reflection. What does a fulfilling retirement look like for you? Do you want to travel, start a new business, volunteer, spend more time with family or pursue hobbies? Think about where you will live if youre approaching retirement – perhaps in your current home, a downsized condo or a location with lower taxes and cost of living. Clarifying your goals will impact every other decision, from saving strategy to estate planning.

Philosophers understood the importance of self‑examination. Socrates admonished, “Question everything”. Applying this wisdom to retirement means questioning assumptions about what you need or want. Plato observed, “The beginning is the most important part of the work”. The beginning of your retirement journey should start with honest conversations about lifestyle expectations, health considerations and personal values.

Practical actions

• Create a detailed bucket list of experiences, learning goals and personal projects you want to pursue during retirement. This list will help you prioritize resources.
• Have conversations with loved ones about shared visions. If you are married or in a long‑term partnership, discuss expectations regarding travel, support for adult children and plans for housing and healthcare.
• Research potential retirement locales. Consider cost of living, climate, healthcare quality and proximity to family. Relocating to a low‑tax or lower‑cost state like Florida can stretch your retirement dollars.

2. Inventory your resources and projected income

After clarifying your vision, gather a detailed picture of your assets and future income if youre apporaching retirement. AARP’s retirement checklist notes that for many retirees, Social Security benefits replace roughly 40 % of pre‑retirement earnings and constitute at least half the income of 39 % of men and 44 % of women over 65aarp.org. This dependence underscores the importance of estimating your expected Social Security benefits and understanding how claiming age affects monthly payments.

Evaluate and organize your assets

• Retirement accounts – compile balances of 401(k)s, 403(b)s, IRAs and HSAs. Make sure you know the beneficiaries on each account; beneficiary designations override what is written in a will.
• Non‑retirement savings – track taxable brokerage accounts, bank savings, certificates of deposit, real estate equity and any business interests. Use conservative assumptions about growth rates.
• Pensions and annuities – request pension estimates from former employers and statements from annuity providers. Understand whether benefits will be reduced if you retire early or continue to work.

Estimate expenses and cash flow

The classic 4 % rule can be a starting point for calculating how much savings you can withdraw each year, but safe withdrawal rates vary by age and many other things need to be factored into the equation. Create a budget that includes essential expenses (housing, healthcare, insurance and taxes) and discretionary spending (travel, hobbies and gifts). Include inflation and rising healthcare costs.

3. Boost savings and take advantage of catch‑up contributions

Warren Buffett observed, “Someone’s sitting in the shade today because someone planted a tree a long time ago”. In retirement planning, the tree is your savings. As you approach retirement, maximize contributions to tax‑advantaged accounts to ensure the tree grows robustly.

Make the most of retirement accounts

• Max out your 401(k)/403(b) – The IRS increased the employee contribution limit to $23,500 for 2025irs.gov. If you are 50 or older, you can contribute an additional $7,500, for a total of $31,000irs.gov. A special SECURE 2.0 provision temporarily raises the catch‑up limit to $11,250 for people aged 60–63irs.gov. These catch‑up contributions let you accelerate savings in the final stretch.
• Don’t neglect IRAs and Roth IRAs – The IRA contribution limit remains $7,000 with a $1,000 catch‑up for those over 50irs.gov. If you expect to be in the same or higher tax bracket in retirement, consider contributing to a Roth IRA so withdrawals are tax‑free.
• Use a Health Savings Account (HSA) – Contributions are tax‑deductible, earnings grow tax‑free and withdrawals for qualified medical expenses are untaxed. Unused HSA funds can supplement retirement income later.

Stay diversified and manage risk

Maintain a diversified portfolio that includes stocks, bonds and alternative assets if your’e approaching retirement. Although you may want to reduce risk as retirement nears, over‑exposure to bonds may cause your savings to stagnate. Work with a financial adviser to adjust your allocation. Many people consolidate old 401(k)s into a single IRA to simplify management and reduce fees.

Henry Ford once said, “Anyone who stops learning is old, whether at twenty or eighty”. Keep learning about investments and stay engaged with the markets. Diversification, periodic rebalancing and ongoing education will help your portfolio weather market swings.

4. Strategize your Social Security and Medicare decisions

Deciding when to claim Social Security is one of the most consequential choices you will make. Full retirement age (FRA) is 67 for those born in 1960 or later. Claiming at age 62 reduces monthly benefits to 70 % of what you would receive at FRA, while delaying until age 70 increases benefits by roughly 8 % per year. Nearly 90 % of Americans over 65 receive Social Security benefits, and for many the payments comprise almost one‑third of their income. Carefully weigh factors such as health, family longevity and job satisfaction.

Key considerations

• Work and earn responsibly – If you claim early and continue working, be aware that benefits are reduced if your earnings exceed $23,400 per year before FRA. In the year you reach FRA, the limit increases to $62,160. Earnings above these thresholds trigger benefit reductions ($1 withheld for every $2 earned or $3 in the year of FRA).
• Understand taxation of benefits – Up to 85 % of benefits may be taxable if your combined provisional income exceeds $25,000 for individuals or $32,000 for couples. Planning withdrawal strategies and Roth conversions can help manage taxes.
• Claim spousal and survivor benefits – Married couples can coordinate claiming strategies; one spouse can claim spousal benefits worth up to 50 % of the other’s benefit. Survivor benefits ensure a surviving spouse receives the higher of the two benefits.

Prepare for healthcare costs

Medicare does not cover all expenses. The National Council on Aging notes that the standard Part B premium is about $185 per month in 2025 with a deductible of $257, while Part D prescription drug plan premiums average $46.50 and the deductible is capped at $590. Original Medicare has no out‑of‑pocket maximum, so having a supplemental plan is often essential.

High‑income retirees may pay Income‑Related Monthly Adjustment Amounts (IRMAA) surcharges on Parts B and D. These surcharges begin at incomes above $212,000 for married couples (half that for singles) and can add $74 to $443.90 per month. If you expect your income to be high in early retirement due to Roth conversions or part‑time work, budget for IRMAA.

Finally, plan for long‑term care. It’s estimated that over 56 % of retirees will need some form of long‑term care, with an average duration of 3.1 years. Traditional Medicare does not pay for custodial care. There are other ways to plan for this risk besides just purchasing Long Term Care Insurance.

5. Establish a sustainable income and withdrawal strategy

The transition from accumulation to distribution requires a careful plan so your savings last for decades. First, understand Required Minimum Distributions (RMDs): starting at age 73, you must withdraw a minimum amount annually from traditional IRAs and employer plansirs.gov. Your first RMD is due by April 1 of the year after you turn 73, and subsequent RMDs must be taken by December 31irs.gov. Failure to take an RMD triggers an excise tax of up to 25 % (reduced to 10 % if corrected within two years)irs.gov. Roth IRAs are exempt during the owner’s lifetimeirs.gov.

Construct a withdrawal plan

1. Layer your income sources. Combine Social Security, pensions, annuities and withdrawals from tax‑deferred, tax‑free and taxable accounts. Coordinate which accounts to draw from first to minimize taxes and allow tax‑deferred accounts to grow.
2. Use dynamic withdrawal rates. Rather than sticking to a rigid 4 % rule, adjust withdrawals based on market conditions, spending needs and age.
3. Maintain emergency and discretionary funds. Keep 6–12 months of essential expenses in accessible cash or short‑term bonds to avoid selling investments during market downturns. Establish a separate fund for big purchases or travel.
4. Work part‑time. If you enjoy your career or want extra income, working part‑time can reduce pressure on your portfolio and delay Social Security. Just be mindful of earnings limits.

Confucius wrote, “We have two lives, and the second begins when we realize we only have one”. A sustainable income plan allows your second life to be purposeful rather than stressful.

6. Reduce debt and manage expenses

Approaching retirement is the time to simplify your financial life. High‑interest debt like credit cards or car loans can erode retirement income; prioritizing thier repayment before you stop working frees up cash flow. Paying down debt early can add thousands of dollars to your annual spending capacity.

Expense management strategies

• Consolidate and refinance debt. Use the years before retirement to refinance mortgages at favorable rates, consolidate credit card balances and pay down car loans. Set a goal to be free of high‑interest debt when you retire.
• Downsize housing. Selling a large home and moving to a smaller property can reduce maintenance, insurance and property taxes. Some retirees relocate to states or countries with lower taxes and living costs.
• Cut unnecessary expenses. Review subscriptions, insurance policies and discretionary spending. Create a “must‑have” and “nice‑to‑have” list to prioritize spending.
• Increase cash reserves. Build an emergency fund to cover unexpected expenses or for market downturns. This reserve is separate from your investment portfolio and provides peace of mind.

7. Update your estate plan and legal documents

Retirement is a good time to ensure that your legacy documents reflect your current wishes. Estate planning is not only for the wealthy; it ensures that your assets pass smoothly to heirs and that someone you trust can make decisions if you become incapacitated.

Review your existing documents

• Wills and trusts – As your life changes, confirm that your executors and trustees are still appropriate. If grandchildren or new family members have arrived, update distributions accordingly.
• Durable power of attorney and healthcare proxy – These documents designate people to manage your finances and medical decisions if you cannot. Review them every few years to ensure they still reflect your wishes and the designated agents remain willing and able to serve.
• Beneficiary designations – Retirement accounts and life insurance policies transfer according to beneficiary forms, regardless of what your will says. Revisit beneficiaries after births, deaths, marriages or divorces.
• Plan for RMD and tax considerations – Secure 2.0 raised the RMD age to 73 and allows qualified charitable distributions up to $100,000 annually to reduce taxable income. Consider leaving tax‑deferred accounts to charity and Roth accounts to heirs.

Changes in retirement account rules and family structures make periodic estate plan reviews essential.

Closing thoughts: Embrace the journey

As you near retirement, uncertainty can feel unsettling. Yet planning deliberately can transform anxiety into anticipation. Here are some final takeaways:

• Start early but don’t despair. Even if you are behind on savings, catch‑up contributions and careful budgeting can dramatically improve your outlook. It is never too late to make better decisions.
• Seek professional guidance. A trusted financial adviser, tax professional and estate attorney can help you navigate complex rules and tailor strategies to your situation. AARP, the IRS and Social Security Administration provide calculators and resources (see links below) to help you estimate benefits and plan for the future.
• Cultivate purpose. Money is only part of the equation. Pursue hobbies, volunteer, learn new skills and build relationships. A meaningful retirement is one where your calendar is filled with activities that matter to you.

Like the tree in Warren Buffett’s proverb, retirement success grows from seeds planted well before you stop working. By clarifying your vision, inventorying resources, maximizing savings, strategizing Social Security and Medicare, creating a sustainable withdrawal plan, reducing debt and maintaining your estate plan, you are deliberately nurturing that tree. At Prosperous Living we believe retirement should be a time of discovery and fulfillment. Let us know how we can help you on your journey.

Valuable resources

Below is a collection of official resources, calculators and guides to help you implement the steps outlined above. These links provide accurate information about Social Security, Medicare, retirement savings rules and estate planning.

1. Social Security Retirement Estimator: Estimate your future benefits based on your earnings history. https://www.ssa.gov/benefits/retirement/estimator.html
2. SSA Full Retirement Age Chart: Determine your full retirement age and how benefits change if you claim early or late. https://www.ssa.gov/planners/retire/retirechart.html
3. Medicare Plan Finder: Compare Original Medicare, Medicare Advantage and Part D plans in your area. https://www.medicare.gov/plan-compare/
4. Medicare.gov Out‑of‑Pocket Cost Overview: Understand premiums, deductibles and maximum out‑of‑pocket limits for Parts A, B, C and D. https://www.medicare.gov/basics/costs/medicare-costs
5. IRS Retirement Topics – Contribution Limits: Read the latest IRS limits for 401(k), IRA and other plans. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-contributions-limits
6. IRS Required Minimum Distributions (RMD) FAQs: Understand RMD rules and penalties. https://www.irs.gov/retirement-plans/required-minimum-distributions
7. AARP Retirement Calculator and Planning Guides: Tools and articles to help you budget and plan. https://www.aarp.org/retirement-planning/
8. USAGov Retirement Resources: Government guide to Social Security, Medicare and retirement benefits. https://www.usa.gov/retirement
9. Estate Planning Checklist: A simple guide to reviewing wills, trusts, powers of attorney and beneficiary designations. Request Access

We hope these resources empower you to make informed, confident choices. Remember, retirement isn’t an end—it’s an opportunity to craft the next chapter of your life. Contact us if you need support or would like a complementary review; Prosperous Living is here as your partner on this journey.