Month 6: Get the Big Picture in Order

Confirm Your Official Retirement Date, and Tell Your Employer

Set a specific date and notify your employer. Most HR departments need several weeks to process retirement paperwork, calculate pension or 401(k) distributions, convert accrued PTO, and prepare benefit termination notices. Six months is appropriate notice for most professional roles; some organizations require more.

Ask HR directly:

• When does my health insurance coverage end?
• Can unused vacation or sick time be paid out?
• What happens to unvested employer matching contributions?
• Are there any pension elections I need to make before I leave?

Getting these answers now gives you time to make decisions without pressure.

Take Stock of Everything You Own

Before you can build an income plan, you need a complete picture. List every account: 401(k)s, IRAs, Roth IRAs, brokerage accounts, savings accounts, pensions, and any deferred compensation. Include the balance, account type, and the institution where it's held.

This inventory is the foundation of your retirement withdrawal strategy. Without it, you're guessing.

Lock In Your Social Security Claiming Strategy

If you haven't decided when to claim Social Security, now is the time. Not one month before your last day — now.

You can claim Social Security retirement benefits as early as 62, but doing so permanently reduces your monthly benefit by up to 30%. Waiting past your Full Retirement Age (FRA), 67 for anyone born in 1960 or later, earns you an additional 8% per year until age 70.

The claiming decision affects your spouse, too. When the higher-earning spouse delays benefits, the resulting survivor benefit is also larger, potentially providing your partner with significantly more income if you die first.

If you plan to claim within three months of retirement, start your Social Security application now. The SSA recommends applying three to four months before your intended start date.

Month 5: Solve the Healthcare Problem

Healthcare is often the most expensive and most overlooked piece of the pre-retirement puzzle. If you're retiring before 65, you lose employer-sponsored insurance before Medicare kicks in — and that gap can cost more than people expect.

If You're Retiring Before 65

You have three primary options to bridge the gap:

COBRA continuation coverage lets you stay on your employer's health plan for up to 18 months after leaving. The catch: you pay the full premium, your share plus what your employer was covering — plus a 2% administrative charge. For many people, this means several hundred to over a thousand dollars per month. It preserves your existing coverage and network, which may be worth the cost depending on your health needs.

ACA Marketplace plans are available when you lose employer coverage — losing job-based insurance qualifies you for a Special Enrollment Period, giving you 60 days to choose a plan outside the annual open enrollment window. Subsidies based on income can significantly reduce premiums for qualifying households.

A spouse's employer plan is often the most cost-effective bridge if your spouse is still working with employer-sponsored coverage. Check whether you qualify as a dependent on their plan before ruling it out.

If you're retiring at 62 or 63, COBRA may not last long enough to get you to Medicare — at most 18 months. That means you'll likely need a Marketplace plan for part of the gap period. Factor the full cost of premiums, deductibles, and out-of-pocket maximums into your retirement budget.

If You're Turning 65 Within 6 Months

Medicare enrollment begins three months before your 65th birthday month. If you're already receiving Social Security, you'll be enrolled automatically in Medicare Parts A and B. If you're not yet collecting Social Security, you need to sign up on your own — and you should do it proactively to avoid a gap in coverage.

Missing your Initial Enrollment Period triggers a late enrollment penalty for Part B that persists for as long as you have Medicare. Don't let an administrative oversight create a permanent cost increase.

Talk to your employer's benefits administrator now about the transition. Ask specifically whether your current coverage is considered "creditable" under Medicare rules, as this affects your Part D drug coverage enrollment timeline.

The ideal Alabama retirement starts with a plan.

Let's build your ideal retirement.

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Month 4: Build Your Income Plan

This is the most consequential financial work you'll do before you retire. The question isn't just how much money you have — it's how you'll convert that money into reliable monthly income.

Set Up Your Cash Buffer First

Before your last paycheck, build a cash reserve covering 12 to 18 months of essential living expenses in a high-yield savings account or money market fund. This is your immediate spending bucket.

Why so much? Because the first few years of retirement carry a specific risk called sequence of returns risk. If a market downturn hits early in your retirement and you're forced to sell investments to cover expenses, you're locking in losses at the worst possible time — and permanently reducing the portfolio's ability to recover. A cash buffer lets you wait out a downturn without touching your long-term investments.

Retiring into a down market is not a disaster if you have the cash not to sell into it.

Decide Which Accounts to Draw From — and When

The order in which you withdraw from different account types has a direct impact on your lifetime tax bill. A simple framework most advisors use:

• Taxable brokerage accounts first — draw from these early when your income is lower, and you may pay little or no tax on long-term capital gains.
• Tax-deferred accounts (traditional IRA, 401(k)) next — withdrawals are taxed as ordinary income; strategic draws can keep you in a lower tax bracket.
• Roth accounts last — tax-free growth, no Required Minimum Distributions during your lifetime, ideal for late-retirement spending or passing to heirs.

This is a general framework, not a rule for every situation. Your specific tax bracket, Social Security timing, and RMD schedule all affect the right sequence for you. A retirement income advisor can model this for your exact numbers.

Test-Drive Your Budget Now

Run a "practice month" while you're still working. Calculate your projected retirement income — Social Security (if you'll be claiming), portfolio withdrawals, pension payments, or any part-time income — and limit your actual spending to that amount for a full month.

This exercise surfaces the gaps between what you plan to spend and what retirement actually costs. It's far easier to adjust a budget six months before you retire than six months after.

Apply for Your Pension (If You Have One)

If you're entitled to a pension through a current or former employer, contact the plan administrator now. Pension elections often have long processing windows, and some decisions — like choosing between a single life annuity and a joint and survivor annuity — are irrevocable. Getting this paperwork started early means it won't hold up your retirement date.

Month 3: Clean Up Finances and Tax Planning

Pay Down High-Interest Debt

Fixed debt payments on a fixed income are harder to manage than on a salary. Credit card balances, personal loans, and car payments at high interest rates should be your priority. You don't need to enter retirement debt-free, but you do need to enter it with a clear-eyed picture of what your monthly obligations look like without a paycheck.

Consider a HELOC While You're Still Employed

If you own a home and might need access to equity in retirement, apply for a Home Equity Line of Credit (HELOC) before you leave work. Lenders qualify borrowers based on earned income. Once your W-2 income stops, qualifying for new credit — even with significant assets — becomes considerably harder. A HELOC you don't use costs you nothing, but having it available provides a meaningful safety net.

Review Your Investment Allocation

As you approach retirement, your portfolio's primary job shifts from growth to income and preservation. That doesn't mean abandoning equities — you may still need decades of growth — but it does mean reassessing whether your current allocation matches your risk tolerance and your income needs over the next five to ten years.

The portion of your portfolio you'll need in the next two to three years belongs in stable, low-risk assets. The rest can stay invested for growth. If your allocation hasn't been reviewed recently, do it now — not after a market event forces your hand.

Start Thinking About Roth Conversions

If you have significant traditional IRA or 401(k) balances, the years between retirement and when RMDs begin can be an opportunity for Roth conversions. These are periods when your income is often lower than it was during your working years — and lower than it will be once RMDs kick in.

Converting some traditional IRA funds to Roth now means paying tax at a lower rate today, with tax-free withdrawals later. It also reduces future RMDs, which can prevent being bumped into higher tax brackets in your 70s. This is a planning conversation worth having with a tax advisor.

Understand Your RMD Timeline

If you're approaching 73, start understanding how Required Minimum Distributions will affect your income. The IRS requires you to withdraw a minimum amount annually from traditional IRAs, 401(k)s, and most other tax-deferred accounts starting at 73. Failing to take your RMD carries a steep penalty — 25% of the amount you should have withdrawn.

RMDs are taxed as ordinary income, and a large distribution can push you into a higher bracket, increase the taxable portion of your Social Security benefit, and raise your Medicare Part B and D premiums through IRMAA surcharges. Planning your withdrawal sequence around these realities is not optional — it's how you avoid paying more than you owe.

Month 2: Handle Benefits and Legal Documents

Maximize Your Last Contributions

If your budget allows, make catch-up contributions to your 401(k) or IRA during your final months of employment. In 2025, workers 50 and older can contribute up to $31,000 to a 401(k) ($23,500 standard limit plus a $7,500 catch-up). Workers ages 60–63 can contribute up to $34,750 under enhanced catch-up rules from SECURE 2.0. Every dollar you contribute in these final months reduces your taxable income and adds to your retirement foundation.

If you have a Health Savings Account (HSA), max it out. HSA funds roll over indefinitely, carry no income taxes when used for qualified medical expenses, and can be used for Medicare premiums after 65. It's one of the most tax-efficient vehicles available to pre-retirees.

Review and Update Beneficiary Designations

Beneficiary designations on retirement accounts, life insurance policies, and annuities override your will. That means if you named an ex-spouse 20 years ago and never updated the form, those assets pass to them — regardless of what your will says.

Go through every account and confirm the designations are current and match your intentions. While you're at it, review your will, healthcare proxy, and power of attorney. Retirement is a significant life transition, and estate documents should reflect where you are now, not where you were a decade ago.

Enroll in Your Retiree Benefits (If Available)

Some employers offer retiree health, dental, or life insurance plans. These are becoming rarer, but if your employer offers them, understand what's included, what it costs, and how it interacts with Medicare. Ask during month 6, some elections are time-sensitive and can't be made after your last day.

Month 1: Final Checks Before You Walk Out

Confirm Your Income Sources Are Set Up

Make sure every income stream you'll depend on is set up for direct deposit and confirmed to arrive when expected. Social Security benefits are paid one month in arrears — if your benefits begin in June, the first payment arrives in July. Plan your budget around this timing so you're not caught short in the first month.

If you're rolling over a 401(k) to an IRA, initiate the process well before your last day. Rollovers can take weeks, and during that window your funds may not be accessible.

Know Your First-Month Budget

Your first month of retirement is unique: you may receive a final paycheck, accrued PTO payout, or pension deposit on a different timeline than expected. Build a specific first-month budget that accounts for when each source of income will actually arrive — not just when it's supposed to.

Consider a Retirement Income Consultation

If you haven't already worked with a retirement income specialist, now is an excellent time for a final review. A fresh set of eyes on your plan, income sequencing, Social Security timing, healthcare bridge, tax strategy — can catch gaps that are easy to overlook when you're living inside your own numbers.

FAQs

What's the single most important financial move to make 6 months before retirement? Build your cash buffer. Having 12–18 months of expenses in liquid, stable accounts means you can weather a market downturn in your first year without selling investments at a loss — one of the biggest risks to a retirement portfolio's long-term health.

Do I need to notify Social Security separately from Medicare? Yes. Social Security and Medicare are related but separate. If you're not yet collecting Social Security at 65, you must actively enroll in Medicare during your Initial Enrollment Period (starting three months before your 65th birthday) or risk late enrollment penalties.

Can I still make retirement account contributions in my final months of work? Yes — and you should if you can. Contributions made in your final months still reduce your taxable income for the year and grow tax-deferred. Take full advantage of the window while you still have earned income.

What if I have multiple 401(k)s from past employers? Consolidating old 401(k)s into a single IRA before retirement simplifies your income plan, makes RMD calculation more straightforward, and can reduce account fees. Initiate any rollovers before your last day to avoid complications with employer plan access.

What happens to my HSA when I retire? You can no longer contribute to an HSA once you enroll in Medicare Part A or Part B. But existing funds stay yours and can be used tax-free for qualified medical expenses — including Medicare premiums, deductibles, and copays. After 65, you can also use HSA funds for non-medical expenses (though those withdrawals are taxed as ordinary income).

Is it too late to do a Roth conversion in the year I retire? Not at all — in fact, the year you retire is often one of the best years for a Roth conversion, since your earned income is lower. Talk to a tax advisor about how much to convert to stay within a favorable tax bracket.

Final Thoughts

Six months is not a long time. But it's enough time to do everything on this list if you start now.

Retirement doesn't go wrong because people are unprepared emotionally. It goes wrong because the details — healthcare timing, account sequencing, Social Security coordination — were left to the last minute. Each item on this checklist connects to every other: your Social Security decision affects your taxes, your taxes affect your Medicare premiums, your Medicare premiums affect your budget.

That's why working with a retirement income specialist isn't a luxury — it's the difference between a plan that holds up and one that surprises you when you can least afford it.

Schedule a free consultation with a Retirable advisor to review your plan before you finalize your retirement date.

The ideal Alabama retirement starts with a plan.

Let's build your ideal retirement.

Talk with a planning professional at Retirable →