Retirement is a big step, and if you’re planning to retire soon, that’s exciting news. But before you start planning your retirement party, there are a few things you can do in advance to make sure you’re all set. Here are six tips to consider:

Consider “Your Purpose”:

Have a plan as to what you are retiring “to” and not what you are retiring “from”.  Retaining a sense of purpose is vital to enjoying your retirement and not getting bored.  Start engaging in your hobbies, as well as friends and family now that you will have more free time to do so.

Don’t leave money on the table:

Be sure to check if you’re entitled to any matching or profit-sharing contributions from your employer for your retirement plan. Also, be mindful of vesting dates for those plans as well as any restricted stock units or other forms of stock options which are close to vesting.

Make sure you understand the terms before you set your final work date. Also, look into increasing your personal contributions to reach your maximum limit, if your plan allows for it.

Timing can be everything:

This is often true when it comes to retirement. If you have access to a pension, those benefits are calculated based on your earnings history, so retiring before an annual compensation adjustment could affect your benefits. Also, be aware of any bonus payments and their eligibility requirements that could be lost based on when you retire.

Considering vacation time:

Unused vacation days are usually paid out with your final paycheck, but this lump sum could push you into a higher tax bracket. If you’re retiring near the end of the year, you may consider taking your vacation time earlier to spread out your income.

Refresh your risk profile:

Retirement means transitioning from saving to spending, so make sure your investments are balanced to support your new lifestyle. Rebalancing your portfolio can help you manage market downturns.  Talk to your advisor!

Don’t forget about taxes:

Unlike when you were working, taxes aren’t automatically withheld from your retirement income. You’ll need to opt in to have taxes withheld from Social Security benefits, pension benefits, and IRA/401(k) distributions to avoid underpayment penalties.

Retirement is a big milestone, so it’s important to be prepared. If you have any questions or need guidance, don’t hesitate to reach out to us. We can help ensure you’re on track with your financial plan and long-term goals.