Top 10 Things To Do Before You Retire

Retirement is one of the biggest transitions you will make in your life. Leaving the workforce can give you more freedom and flexibility, but a successful retirement usually requires preparation well before your final day at work.

The years immediately before retirement are an excellent opportunity to test your assumptions, identify potential financial gaps, organize your affairs, and think carefully about how you want to spend your time. The goal isn't simply to accumulate enough money—it is to build a retirement plan that supports the lifestyle you actually want.

Here are 10 important things to consider before you retire.

1. Create a Retirement Budget

Your spending patterns may change significantly once you stop working. Some expenses may disappear, such as commuting and work-related costs, while others—such as travel, hobbies, healthcare, or home improvements—may increase.

Start by estimating your retirement expenses in realistic categories. Separate essential expenses from discretionary spending and allow room for unexpected costs.

A retirement budget is much more useful when it is incorporated into a broader retirement projection. Try the Retirementize retirement calculator to see how your spending assumptions affect your long-term retirement plan.

2. Understand Your Retirement Income Sources

Before retiring, identify where your retirement income will come from and when each source is expected to begin.

Depending on your circumstances, your income may include employer pensions, RRSP or 401(k) withdrawals, CPP and OAS, Social Security, investment income, annuities, rental income, or part-time employment.

Don't just add up your account balances. Think about how those assets will actually produce income over several decades. Consider taxes, inflation, investment returns, required withdrawals, and the timing of government benefits.

Our retirement income vs. savings calculator can help illustrate the relationship between your savings and the income you may need throughout retirement.

3. Eliminate or Manage High-Interest Debt

Entering retirement with debt isn't necessarily a problem, but high-interest debt can put significant pressure on a fixed or semi-fixed retirement income.

Prioritize expensive debt such as credit cards and high-interest personal loans. If you have a mortgage, compare the cost of carrying it into retirement with the potential benefits of paying it down.

Don't automatically use all of your retirement savings to eliminate a mortgage, however. Consider taxes, investment returns, liquidity, and your overall retirement income plan before making a large lump-sum payment.

4. Understand Your Government Benefits

Government retirement benefits can represent an important part of your retirement income, so understand how the timing of those benefits affects your overall plan.

In Canada, for example, CPP and OAS have different eligibility and timing rules. The decision about when to start CPP can have a substantial effect on your lifetime monthly benefit.

Delaying CPP is one strategy worth understanding, but it should be evaluated alongside your health, longevity expectations, other income sources, tax situation, and need for income today.

5. Review Healthcare and Insurance Coverage

Healthcare planning doesn't end when you retire. In fact, healthcare and insurance costs can become increasingly important as you get older.

Review the coverage available through your provincial or state healthcare system, employer retiree benefits, private insurance, and any other coverage you may have.

Also consider expenses that may not be fully covered, including prescription drugs, dental care, vision care, travel medical insurance, home care, and other support services.

If you are retiring before becoming eligible for a particular government or employer benefit, make sure you have a plan to cover the gap.

6. Decide Where and How You Want to Live

Your home is often one of your largest assets and one of your largest ongoing expenses. Retirement is a good time to reconsider whether your current home still fits your lifestyle.

You might choose to stay where you are, downsize, move closer to family, relocate to a lower-cost area, or make modifications that allow you to remain safely in your home as you age.

Don't look only at the purchase price of a potential new home. Consider property taxes, insurance, maintenance, utilities, transportation, accessibility, and the cost of moving.

If you plan to remain in your home, our article on home modifications for aging in place provides ideas for making your living environment safer and more practical as your needs change.

7. Plan for Taxes in Retirement

Retirement income can come from accounts and sources that receive very different tax treatment. Understanding those differences can help you make better withdrawal decisions.

For example, withdrawals from an RRSP or traditional IRA are generally taxable, while qualifying TFSA withdrawals in Canada are tax-free. Other investments may generate interest, dividends, or capital gains that are taxed differently.

Your retirement plan should therefore consider not only how much income you need, but also where that income comes from and how withdrawals affect your tax bill and government benefits.

Strategies such as pension income splitting, carefully timed registered-account withdrawals, TFSA planning, and an RRSP meltdown strategy may be worth considering depending on your circumstances.

8. Get Your Legal and Estate Documents in Order

Retirement planning isn't complete without making sure your legal affairs are organized.

Review your will and make sure it reflects your current wishes. You should also understand the documents that govern financial decision-making and healthcare decisions if you become unable to make those decisions yourself.

Review beneficiary designations on pensions, retirement accounts, life insurance policies, and other accounts as well. These designations can have important consequences for how assets are transferred after death.

Major life changes—such as marriage, divorce, the birth of a child, a death in the family, or a significant change in your assets—are good reasons to review your estate documents.

9. Decide How You Will Spend Your Time

Retirement is about more than money. One of the biggest changes you may experience is having substantially more control over how you spend your time.

Think about what a typical week in retirement will actually look like. You might want to travel, volunteer, spend more time with family, pursue hobbies, exercise, take classes, start a business, or work part-time.

It's also worth considering the social aspect of retirement. Work often provides structure and regular interaction with other people. Building activities and relationships outside of work can make the transition easier.

For inspiration, check out our list of 101 best ways to spend retirement .

10. Test Drive Your Retirement

One of the most useful things you can do before retiring is to practice living the way you expect to live in retirement.

Try following your projected retirement budget for several months while you are still working. If your planned retirement spending is lower than your current spending, direct the difference toward savings or debt repayment.

This exercise can reveal problems before they become permanent. You may discover that your travel budget is too low, housing costs are higher than expected, or you simply haven't accounted for enough discretionary spending.

A test run can also help you determine whether you are emotionally ready to leave work and what you want your new routine to look like.

Build a Retirement Plan Before You Need It

The best time to identify a retirement planning problem is before you retire. Once your employment income stops, some financial decisions become much harder to change.

Use the years leading up to retirement to test different scenarios. What happens if you retire two years earlier? What if investment returns are lower than expected? What if inflation remains elevated? What if you live longer than expected? What if you spend more on travel during the first few years of retirement?

These scenarios can help you understand where your plan is strong and where you may need additional flexibility.

Conclusion

Retirement preparation involves much more than reaching a particular savings balance. You need to think about spending, income, taxes, healthcare, housing, debt, government benefits, legal documents, and how you want to spend your time.

By addressing these areas before you retire, you give yourself more time to make adjustments while you still have employment income and other financial flexibility.

Whether you're several years away from retirement or approaching your final day at work, a detailed retirement projection can help turn these decisions into a practical plan. You can also learn more about the different phases of retirement and avoid some of the most common retirement planning mistakes .

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