A Financial Advisor’s Pre-Retirement Checklist
The years leading up to retirement are often when the most important financial decisions are made. This article explores 10 key retirement planning considerations, including Social Security claiming strategies, Medicare enrollment, retirement tax planning, investment risk, pension elections, and estate planning. Understanding these decisions can help retirees avoid costly mistakes and improve long-term financial confidence. Proper retirement planning requires coordinating income, taxes, healthcare, investments, and risk management into a comprehensive strategy.
Retirement is not just a financial milestone. It is a transition that changes how you generate income, pay taxes, manage healthcare, invest your savings, and plan for the future.
Many retirees focus almost entirely on building their retirement accounts, but the years immediately before retirement are often when the most important decisions get made. Choices involving Social Security, Medicare, taxes, pensions, investments, and withdrawal strategies can affect your financial security for decades.
Some of these decisions are irreversible. Others can create unexpected tax consequences or increase financial stress if they are not reviewed carefully.
Before you leave your job, here are 10 critical retirement decisions worth reviewing carefully.
1. Can You Actually Afford to Retire?
Why It Matters
This is the most important retirement question and often the most emotional one.
Many people focus on whether they have “enough” saved, but retirement planning is really about whether your income can sustainably support your lifestyle over a retirement that could last 25 to 30 years.
The biggest risk is not simply running out of money. It is retiring without understanding:
how your income will work
how inflation affects spending
how market declines impact withdrawals
how taxes reduce retirement income
how healthcare costs fit into the plan
What to Review
Your expected monthly retirement expenses
Guaranteed income sources
Investment withdrawal strategy
Inflation assumptions
Sequence of returns risk
Emergency reserves
Expected retirement longevity
Example
A couple retiring at age 62 may initially believe they only need $7,000 per month. But after factoring in healthcare premiums, inflation, travel, taxes, home maintenance, and irregular expenses, their actual spending may be closer to $9,000 monthly.
That difference can significantly impact how sustainable their retirement plan is.
Key Insight
Retirement success is not just about portfolio size. It is about whether your income plan can survive inflation, market volatility, and unexpected expenses over time.
2. When Should You Claim Social Security?
Why It Matters
Social Security is one of the most important retirement income decisions because claiming timing can permanently affect your lifetime benefits.
Many retirees underestimate:
how much benefits increase by waiting
the impact on surviving spouses
how taxes affect benefits
how working before full retirement age can temporarily reduce payments
What to Review
Claiming at 62 vs. full retirement age vs. 70
Spousal benefits
Survivor benefits
Earnings limits before full retirement age
Taxation of benefits
Longevity expectations
Coordination with retirement withdrawals
Example
A retiree eligible for $2,200 monthly at full retirement age could receive roughly:
$1,540 at age 62
$2,200 at full retirement age
nearly $2,900 at age 70
That difference can significantly impact lifetime household income, especially for married couples.
Important Note
The best Social Security strategy is not always about maximizing benefits. It is about coordinating benefits with taxes, investments, pensions, and overall retirement income planning.
3. Have You Planned for Healthcare and Medicare Costs?
Why It Matters
Healthcare is one of the biggest retirement expenses and one of the largest sources of financial anxiety for retirees.
People retiring before age 65 often underestimate the cost of private health insurance before Medicare begins. Others make Medicare enrollment mistakes that create lifelong penalties or unexpected coverage gaps.
What to Review
Healthcare costs before Medicare eligibility
Medicare enrollment deadlines
Medicare Part B and Part D coverage
Medicare Advantage vs. Medigap
IRMAA surcharges
Long-term care exposure
Health Savings Account planning
Example
A retiree who delays Medicare enrollment because they misunderstand employer coverage rules could face permanent premium penalties later.
Similarly, higher-income retirees may unknowingly trigger IRMAA surcharges that significantly increase Medicare premiums.
Key Insight
Healthcare planning is not just about insurance coverage. It is also about tax planning, income management, and preparing for future care needs.
4. Have You Reviewed Your Retirement Tax Strategy?
Why It Matters
One of the biggest surprises retirees face is discovering that retirement does not automatically lower taxes.
Different retirement accounts are taxed differently, and poor withdrawal sequencing can unintentionally push retirees into higher tax brackets.
What to Review
Roth conversion opportunities
Future RMD exposure
Tax diversification
Capital gains planning
Social Security taxation
Medicare IRMAA thresholds
Withdrawal sequencing
Example
A retiree with large traditional IRA balances may face substantial required minimum distributions later in retirement, even if they do not need the income.
Strategic Roth conversions before RMD age can sometimes reduce future tax exposure and improve long-term flexibility.
Important Note
Many retirees focus on investment returns but overlook lifetime tax efficiency. The way retirement income is structured can be just as important as portfolio performance.
5. Do You Have a Reliable Retirement Income Strategy?
Why It Matters
Retirement changes the financial mindset from accumulation to distribution.
That transition can feel uncomfortable because your paycheck stops and your portfolio becomes the primary income source.
Without a clear strategy, retirees often either overspend too early or become afraid to spend at all.
What to Review
Which accounts to withdraw from first
Cash reserve strategy
Sequence of returns risk
Dividend income assumptions
Withdrawal sustainability
Coordination between income sources
Example
Two retirees with identical portfolios can experience very different outcomes depending on when market declines occur early in retirement.
Large withdrawals during market downturns can permanently damage long-term portfolio sustainability.
Key Insight
A retirement income plan should balance:
stability
flexibility
tax efficiency
long-term growth potential
6. Is Your Investment Risk Appropriate for Retirement?
Why It Matters
Many people approaching retirement ask the same questions:
“Am I taking too much risk?”
“What if there’s another 2008?”
“Should I move everything to cash?”
The challenge is balancing protection with growth.
Being too aggressive can increase volatility at the wrong time. But being too conservative can create inflation risk and reduce long-term purchasing power.
What to Review
Current asset allocation
Portfolio downside risk
Retirement timeline
Cash reserves
Bond allocation
Inflation protection
Income needs from investments
Example
A retiree holding overly conservative investments may struggle to maintain purchasing power over a 25-year retirement, especially during periods of elevated inflation.
Important Note
Retirement investing is not about eliminating risk entirely. It is about managing risk appropriately for your goals, income needs, and time horizon.
7. Have You Reviewed Your Pension Options Carefully?
Why It Matters
Pension elections are often irreversible.
For retirees with pensions, decisions involving lump sums, survivor benefits, and payout structures can have major long-term implications for household income and estate planning.
What to Review
Lump sum vs. monthly pension
Survivor benefit elections
Inflation adjustments
Pension solvency considerations
Tax implications
Coordination with Social Security
Example
Choosing the highest monthly pension payout without survivor protection may leave a surviving spouse with significantly reduced household income later.
Key Insight
The best pension decision depends on:
health
marital status
other retirement assets
legacy goals
guaranteed income needs
8. Have You Updated Your Estate Plan and Beneficiaries?
Why It Matters
Many retirees assume their estate documents are current when they have not reviewed them in years.
Outdated beneficiary designations and missing legal documents can create unnecessary complications for family members later.
What to Review
Wills and trusts
Powers of attorney
Healthcare directives
Beneficiary designations
Transfer-on-death accounts
Inherited IRA rules
Estate tax considerations
Example
An outdated IRA beneficiary form can override instructions written in a will.
That mistake can unintentionally direct retirement assets to the wrong person.
Important Note
Estate planning is not just about wealth transfer. It is also about maintaining control, simplifying administration, and protecting family members during difficult situations.
9. Have You Reviewed Your Debt and Spending Plan?
Why It Matters
Retirement spending often changes more than people expect.
Some retirees spend less. Others spend significantly more during the first decade of retirement due to travel, hobbies, home projects, or helping family members financially.
What to Review
Mortgage payoff decisions
Credit card debt
Retirement budget assumptions
Downsizing considerations
Support for adult children
Large one-time expenses
Lifestyle expectations
Example
A retiree may choose to keep a low-interest mortgage rather than aggressively paying it off in order to preserve liquidity and investment flexibility.
The right decision depends on both financial and emotional factors.
Key Insight
A realistic retirement spending plan should account for both expected and unexpected expenses.
10. What Happens If Something Goes Wrong?
Why It Matters
One of the biggest retirement planning mistakes is assuming everything will go according to plan.
Strong retirement planning includes preparing for uncertainty.
What to Review
Long-term care exposure
Widowhood planning
Emergency reserves
Market downturn scenarios
Caregiving costs
Family health history
Insurance coverage
Example
A major healthcare event or long-term care need can dramatically change retirement spending and income needs later in life.
Preparing in advance can help reduce financial stress during difficult situations.
Important Note
Retirement planning is not about predicting the future perfectly. It is about building flexibility into the plan.
Common Retirement Mistakes to Avoid
Some of the most common retirement mistakes happen during the transition into retirement itself.
These include:
Claiming Social Security too early without reviewing alternatives
Ignoring tax planning opportunities before RMD age
Underestimating healthcare costs
Taking too much or too little investment risk
Failing to stress-test retirement income
Overlooking beneficiary designations
Retiring without a coordinated withdrawal strategy
Assuming retirement spending will remain constant
Final Thoughts
Retirement is one of the biggest financial transitions of your life. The decisions made in the years immediately before retirement can affect your income, taxes, healthcare costs, and financial flexibility for decades.
Many of the most expensive retirement mistakes are preventable with proactive planning and careful coordination.
At Greenbush Financial Group, we believe retirement planning should go beyond investment performance alone. A successful retirement plan coordinates income, taxes, healthcare, investments, estate planning, and long-term risk management into a strategy designed to support both confidence and flexibility throughout retirement.
Before you stop working, make sure you review the decisions that matter most.
Rob Mangold
About Rob……...
Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.
FAQ Section
-
What is the most important financial decision before retirement?
The most important decision is determining whether your retirement income plan is sustainable. This includes reviewing spending needs, withdrawal strategies, taxes, inflation, and healthcare costs. -
When should I claim Social Security?
The right claiming age depends on your health, marital status, income needs, longevity expectations, and overall retirement plan. Claiming early permanently reduces benefits, while delaying can increase lifetime income. -
How much should I have saved before retirement?
There is no universal number. Retirement readiness depends on your expected spending, income sources, taxes, healthcare costs, and lifestyle goals. -
What are the biggest retirement tax mistakes?
Common mistakes include ignoring Roth conversion opportunities, triggering higher Medicare premiums, poor withdrawal sequencing, and failing to prepare for RMDs. -
Should I pay off my mortgage before retirement?
It depends on your cash flow, interest rate, liquidity needs, and personal comfort level. Some retirees prioritize debt elimination, while others prefer maintaining investment flexibility. -
How do I prepare for healthcare costs in retirement?
Review Medicare options, estimate out-of-pocket expenses, understand IRMAA rules, and consider how long-term care costs could affect your retirement plan. -
What happens if the market crashes early in retirement?
Early retirement market declines can increase sequence of returns risk, especially when withdrawals are occurring simultaneously. Maintaining proper diversification and cash reserves can help reduce this risk. -
Why is retirement planning more than just investing?
Retirement planning also involves taxes, healthcare, income coordination, estate planning, Social Security, spending strategy, and risk management decisions that affect long-term financial security.
M&A Activity: Make Sure You Address The Seller’s 401(k) Plan
Buying a company is an exciting experience. However, many companies during a merger or acquisition fail to address the issues surrounding the seller’s retirement plan which can come back to haunt the buyer in a big way. I completely understand why this happens. Purchase price, valuations, tax issues, terms, holdbacks, and new employment
Buying a company is an exciting experience. However, many companies during a merger or acquisition fail to address the issues surrounding the seller’s retirement plan which can come back to haunt the buyer in a big way. I completely understand why this happens. Purchase price, valuations, tax issues, terms, holdbacks, and new employment agreements tend to dominate the conversations throughout the business transaction. But lurking in the dark, below these main areas of focus, lives the seller’s 401(k) plan. Welcome to the land of unintended consequences where unexpected liabilities, big dollar outlays, and transition issues live.
Asset Sale or Stock Sale
Whether the transaction is a stock sale or asset sale will greatly influence the series of decisions that the buyer will need to make regarding the seller’s 401(k) plan. In an asset sale, it is common that employees of the seller’s company are terminated from employment and subsequently “rehired” by the buyer’s company. With asset sales, as part of the purchase agreement, the seller will often times be required to terminate their retirement plan prior to the closing date.
Terminating the seller’s plan prior to the closing date has a few advantages from both the buyer’s standpoint and from the standpoint of the seller’s employees. Here are the advantages for the buyer:
Advantage 1: The Seller Is Responsible For Terminating Their Plan
From the buyer’s standpoint, it’s much easier and cost effective to have the seller terminate their own plan. The seller is the point of contact at the third party administration firm, they are listed as the trustee, they are the signer for the final 5500, and they typically have a good personal relationship with their service providers. Once the transaction is complete, it can be a headache for the buyer to track down the authorized signers on the seller’s plan to get all of the contact information changed over and allows the buyer’s firm to file the final 5500.
The seller’s “good relationship” with their service providers is key. The seller has to call these companies and let them know that they are losing the plan since the plan is terminating. There are a lot of steps that need to be completed by those 401(k) service providers after the closing date of the transaction. If they are dealing with the seller, their “client”, they may be more helpful and accommodating in working through the termination process even though they losing the business. If they get a random call for the “new contact” for the plan, you risk getting put at the bottom of the pile
Part of the termination process involves getting all of the participant balances out of the plan. This includes terminated employees of the seller’s company that may be difficult for the buyer to get in contact with. It’s typically easier for the seller to coordinate the distribution efforts for the terminated plan.
Advantage 2: The Buyer Does Not Inherit Liability Issues From The Seller’s Plan
This is typically the main reason why the buyer will require the seller to terminate their plan prior to the closing date. Employer sponsored retirement plans have a lot of moving parts. If you take over a seller’s 401(k) plan to make the transition “easier”, you run the risk of inheriting all of the compliance issues associated with their plan. Maybe they forgot to file a 5500 a few years ago, maybe their TPA made a mistake on their year-end testing last year, or maybe they neglected to issues a required notice to their employees knowing that they were going to be selling the company that year. By having the seller terminate their plan prior to the closing date, the buyer can better protect themselves from unexpected liabilities that could arise down the road from the seller’s 401(k) plan.
Now, let’s transition the conversation over to the advantages for the seller’s employees.
Advantage 1: Distribution Options
A common goal of the successor company is to make the transition for the seller’s employees as positive as possible right out of the gate. Remember this rule: “People like options”. Having the seller terminate their retirement plan prior to the closing date of the transactions gives their employees some options. A plan termination is a “distributable event” meaning the employees have control over what they would like to do with their balance in the seller’s 401(k) plan. This is also true for the employees that are “rehired” by the buyer. The employees have the option to:
Rollover their 401(k) balance in the buyer’s plan (if eligible)
Rollover their 401(k) balance into a rollover IRA
Take a cash distribution
Some combination of options 1, 2, and 3
The employees retain the power of choice.
If instead of terminating the seller’s plan, what happens if the buyer decides to “merge” the seller’s plan in their 401(k) plan? With plan mergers, the employees lose all of the distribution options listed above. Since there was not a plan termination, the employees are forced to move their balances into the buyer’s plan.
Advantage 2: Credit For Service With The Seller’s Company
In many acquisitions, again to keep the new employees happy, the buyer will allow the incoming employee to use their years of service with the seller’s company toward the eligibility requirements in the buyer’s plan. This prevents the seller’s employees from coming in and having to satisfy the plan’s eligibility requirements as if they were a new employee without any prior service. If the plan is terminated prior to the closing date of the transaction, the buyer can allow this by making an amendment to their 401(k) plan.
If the plan terminates after the closing date of the transaction, the plan technically belonged to the buyer when the plan terminated. There is an ERISA rule, called the “successor plan rule”, that states when an employee is covered by a 401(k) plan and the plan terminates, that employee cannot be covered by another 401(k) plan sponsored by the same employer for a period of 12 months following the date of the plan termination. If it was the buyer’s intent to allow the seller’s employees to use their years of service with the selling company for purposes of satisfy the eligibility requirement in the buyer’s plan, you now have a big issue. Those employees are excluded from participating in the buyer’s plan for a year. This situation can be a speed bump for building rapport with the seller’s employees.
Loan Issue
If a company allows 401(k) loans and the plan terminates, it puts the employee in a very bad situation. If the employee is unable to come up with the cash to payoff their outstanding loan balance in full, they get taxed and possibly penalized on their outstanding loan balance in the plan.
Example: Jill takes a $30,000 loan from her 401(k) plan in May 2017. In August 2017, her company Tough Love Inc., announces that it has sold the company to a private equity firm and it will be immediately terminating the plan. Jill is 40 years old and has a $28,000 outstanding loan balance in the plan. When the plan terminates, the loan will be processed as an early distribution, not eligible for rollover, and she will have to pay income tax and the 10% early withdrawal penalty on the $28,000 outstanding loan balance. Ouch!!!
From the seller’s standpoint, to soften the tax hit, we have seen companies provide employees with a severance package or final bonus to offset some of the tax hit from the loan distribution.
From the buyer’s standpoint, you can amend the plan to allow employees of the seller’s company to rollover their outstanding 401(k) loan balance into your plan. While this seems like a great option, proceed with extreme caution. These “loan rollovers” get complicated very quickly. There is usually a window of time where the employee’s money is moving over from seller’s 401(k) plan over to the buyer’s 401(k) plan, and during that time period a loan payment may be missed. This now becomes a compliance issue for the buyer’s plan because you have to work with the employee to make up those missed loan payments. Otherwise the loan could go into default.
Example, Jill has her outstanding loan and the buyer amends the plan to allow the direct rollover of outstanding loan balances in the seller’s plan. Payroll stopped from the seller’s company in August, so no loan payments have been made, but the seller’s 401(k) provider did not process the direct rollover until December. When the loan balance rolls over, if the loan is not “current” as of the quarter end, the buyer’s plan will need to default her loan.
Our advice, handle this outstanding 401(k) loan issue with care. It can have a large negative impact on the employees. If an employee owes $10,000 to the IRS in taxes and penalties due to a forced loan distribution, they may bring that stress to work with them.
Stock Sale
In a stock sale, the employees do not terminate and then get rehired like in an asset sale. It’s a “transfer of ownership” as opposed to “a sale followed by a purchase”. In an asset sale, employees go to sleep one night employed by Company A and then wake up the next morning employed by Company B. In a stock sale, employees go to sleep employed by Company A, they wake up in the morning still employed by Company A, but ownership of Company A has been transferred to someone else.
With a stock sale, the seller’s plan typically merges into the buyer’s plan, assuming there is enough ownership to make them a “controlled group”. If there are multiple buyers, the buyers should consult with the TPA of their retirement plans or an ERISA attorney to determine if a controlled group will exist after the transaction is completed. If there is not enough common ownership to constitute a “controlled group”, the buyer can decide whether to continue to maintain the seller’s 401(k) plan as a standalone plan or create a multiple employer plan. The basic definition of a “controlled group” is an entity or group of individuals that own 80% or more of another company.
Stock Sales: Do Your Due Diligence!!!
In a stock sale, since the buyer will either be merging the seller’s plan into their own or continuing to maintain the seller’s plan as a standalone, you are inheriting any and all compliance issues associated with that plan. The seller’s issues become the buyer’s issues the day of the closing. The buyer should have an ERISA attorney that performs a detailed information request and due diligence on the seller’s 401(k) plan prior the closing date.
Seller Uses A PEO
Last issue. If the selling company uses a Professional Employer Organization (PEO) for their 401(k) services and the transaction is going to be a stock sale, make sure you get all of the information that you need to complete a mid-year valuation or the merged 5500 for the year PRIOR to the closing date. We have found that it’s very difficult to get information from PEO firms after the acquisition has been completed.
The Transition Rule
There is some relief provided by ERISA for mergers and acquisitions. If a control group exists, you have until the end of the year following the year of the acquisition to test the plans together. This is called the “transition rule”. However, if the buyer makes “significant” changes to the seller’s plan during the transition period, that may void the ability to delay combined testing. Unfortunately, there is not clear guidance as to what is considered a “significant change” so the buyer should consult with their TPA firm or ERISA attorney before making any changes to their own plan or the seller’s plan that could impact the rights, benefits, or features available to the plan participants.
Horror Stories
There are so many real life horror stories out there involving companies that go through the acquisition process without conducting the proper due diligence and transition planning with regard to the seller’s retirement plan. It never ends well!! As the buyer, it’s worth the time and the money to make sure your team of advisors have adequately addressed any issues surrounding the seller’s retirement plan prior to the closing date.
About Michael……...
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.
