7 things to do now for a smoother transition to retirement

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The transition from your working life to retirement can be one of the toughest changes in your life. But if you do the 7 things below now, your future transition to retirement will be a smoother one.

1. Identify all your sources of retirement income

Your income in retirement can include money you’ve saved in an employer-sponsored retirement plan or IRA. It can also include other savings or income from a part-time job. And for many people, Social Security can be a large piece of their retirement income.

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Did you know that claiming Social Security at full retirement age will give you 100% of your earned benefit, while waiting until age 70 would give you 124%? Learn more about Social Security strategies.

2. Create your spending plan

As you plan for when and how to take your money from your retirement accounts, there are two competing goals to keep in mind:

Having enough money to support you in retirement, and
Making sure there’s enough money to leave to others, if that’s your plan.

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Consider a spending strategy that lets you adjust your withdrawals based on market changes. With this approach, you’ll take more money in years when your investment returns are higher and less when they’re lower—which may help your money last longer. Learn more about spending strategies.

3. Don’t forget about taxes

When it comes to taxes in retirement, you’ll want to plan years—or even decades—ahead. Whether you’ll be taking money from your retirement accounts or Social Security, you want to know what taxes you might have to pay.

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Did you know that the order you take money out of your various retirement accounts can impact your taxes? There are a number of withdrawal strategies to consider, so you’ll want to find one that works best for you. Learn more about tax strategies in retirement.

4. Understand health care costs and your Medicare options

Our research shows your health care spending could double over the first 20 years of retirement.* Reasons include moving out of your employer-sponsored plan, or an unexpected need for long-term care. So it’s important to know your options before you retire.

Medicare can help you pay for everything from hospital visits and doctor’s services to medications and vaccinations. But the option(s) you choose can impact the services you receive and how much you’re able to pay.

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Did you know that there are 6 things that impact your healthcare costs in retirement—and you have some control over most of them? Learn more about planning for healthcare costs in retirement.

5. Review your investment strategy

Having the right investment mix is important, especially in retirement. It’s a good idea to review the investing basics in the link below and then see if your mix needs to change to help you meet your savings goals.

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If you’re approaching retirement and are not where you want to be financially, you may feel the urge to invest more aggressively to make up for lost time. But this strategy can backfire if markets slump, and you could lose a chunk of your nest egg just when you need it most. Learn more about investing before and during retirement.

6. Make a plan to stay active

You’ve worked hard to get there, so you want to make sure your retirement is a long and healthy one. One of the best ways to do this is to stay mentally and physically active. You’ll not only feel better, but you’ll also reduce your chances of serious illness, injury, and cognitive decline.

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Getting started can be the hardest part of adding new routines to help you increase your physical and mental health. Create realistic goals and focus on activities that you enjoy, to help you stay motivated. Participating in activities with a friend or group can help you stay on track, and it also supports social connections. Learn more about the benefits of staying active in retirement.

7. Get help if you need it

Planning for your financial life in retirement can be full of tough decisions, and it’s hard to know where to begin. If you want to make a plan yourself, Vanguard offers lots of resources to help you create your own roadmap to retirement. And if you want some help, we also offer financial advice tailored to you and your unique needs. We can help you make informed decisions or even manage your money for you.

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Your employer-sponsored retirement plan at Vanguard may offer a number of advice options. Review them to see what they can do for you. You also have access to a variety of advice options if you have a personal investment account with us. Find the option that’s right for you.

Make a smoother move to retirement

Adjusting to life in retirement can be tough. But with a little planning—including following the 7 tips above—you can make smoother moves toward the retirement you want.

Whenever you invest, there's a chance you could lose the money.

*Source: Vanguard and Mercer Health & Benefits, June 2021.

Vanguard’s advice services are provided by Vanguard Advisers, Inc., (“VAI”), a registered investment advisor, or by Vanguard National Trust Company (“VNTC”), a federally chartered, limited-purpose trust company.