What Should I Do 3 Months Before Retirement?

The final three months before retirement require focused attention on financial planning and administrative tasks. This active phase shapes your financial security and well-being, ensuring a smoother transition into retirement.

Confirming Your Financial Readiness

As retirement approaches, review your financial standing and verify income streams. Confirm payments from pensions, Social Security, annuities, and investment withdrawals. Ensure direct deposit information is accurate.

Assess post-retirement expenses. Create a budget that accounts for changes in spending habits, like healthcare or leisure activities, and identifies areas where expenses might decrease. Adjusting your budget provides a clear understanding of your financial needs.

Consider conservative adjustments to your investment portfolio. Ensure sufficient liquidity to cover retirement expenses and reduce exposure to market fluctuations, not long-term growth. Addressing outstanding debt is advisable, as reducing high-interest obligations can alleviate financial burdens and free up cash flow.

Navigating Benefits Enrollment

Enrollment in post-employment benefits is necessary. Health insurance options require immediate attention; choices include Medicare, employer-sponsored retiree health plans, COBRA, or marketplace plans. If eligible for Medicare, enrollment involves specific timelines, often before your 65th birthday, to avoid penalties and ensure continuous coverage.

For employer-sponsored retirement plans like pensions and 401(k)s, understand the distribution options. These include electing a lump-sum payment, choosing an annuity for income, or setting up periodic withdrawals. Contact your plan administrator for information on these choices and to initiate distributions.

Review existing life insurance policies to determine if employer-provided coverage can be converted or if new coverage is needed. Many group plans offer a conversion privilege, allowing coverage without a medical exam, but these rights are time-sensitive, requiring action within 30 to 60 days of employment ending. Address other benefits like dental, vision, or long-term care insurance for continuation or replacement.

Managing Employment Transitions

Notify your employer of retirement. Providing a written retirement letter, three to six months in advance, allows the company time to plan for your departure and facilitate transition of responsibilities. This initiates your exit logistics.

Clarify details regarding your final paycheck and the payout of accrued benefits. Human Resources can provide a breakdown of what to expect and when, ensuring earned compensation is disbursed. Prepare to return company property, including laptops, mobile phones, and identification badges.

Participating in an exit interview provides an opportunity to share insights and feedback. Update your personal contact information with your former employer to ensure you receive documents like W-2 forms and retirement plan statements after your departure.

Updating Personal and Legal Affairs

Review and update your personal and legal documents as you prepare for retirement. Confirm that beneficiary designations on financial accounts, including retirement plans and insurance, reflect your current wishes. Beneficiary designations override a will’s instructions and should be updated promptly after life events like marriage, divorce, or birth, as they ensure assets are distributed as intended and can help avoid probate delays.

Review your estate planning documents, such as wills, trusts, powers of attorney for financial and healthcare matters, and advance directives. This ensures these documents are current and align with your post-retirement circumstances and preferences, reflecting changes in your family, finances, or healthcare.

Beyond formal legal documents, update your address, contact information, and emergency contacts with relevant institutions like banks, utilities, and healthcare providers. Also review your digital footprint and passwords, perhaps creating a secure system or designating trusted individuals for access.