From childhood to adulthood and then into service life, a person works their whole life to live a decent life, fulfill their requirements, and make retirement a pleasant place to live. However, after years of working to earn some money, when an individual is near retirement, the main question arises: what to do 6 months before retirement. However, this is a common and genuine question for many people approaching retirement age.
Looking forward to this concern, planning for retirement before it hits is necessary to use the funds in a way that makes the most out of them. Let discuss.
What Should I Do 6 Months Before Retirement?
If you are near retirement age, then getting prepared for this is crucial. This is because retirement is a significant part of life, as from here the person will no longer be earning money and going to work. The person will enjoy the golden years of their life, but in such a way that retirement can be sufficient. If you are just 6 months away from your retirement age, then making informed decisions and organising things that affect retirement is very important.
There are some areas that you need to focus on during this period :-
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Financial Preparation
This is an important factor that needs to be focused on. You can even work on these aspects before 1 or 2 years of retirement. You need to make sure that the retirement savings, income sources, and other benefits programs are aligned properly or not.
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Healthcare
It is true that the healthcare cost is one of the major expenses that affect the savings significantly. Not just in retirement, but throughout life. Review your healthcare plans and insurance to manage these expenses.
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Pension Plan And Social Security
Your pension account is the source of income that you can expect after retirement. So, choose the most optimal time to start collecting these benefits, like social security benefits.
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Lifestyle
Retirement is all about enjoying the time. So, plan based on your expenses like travelling, working on hobbies, etc.
Being prepared for this big changing moment will make you feel relieved from most of the burden that can cause unnecessary stress.
What To Do 6 Months Before Retirement At 62?
If you are near retirement, then you need to do some important things that will help you in the organized execution of retirement planning. Making a pre-retirement checklist is the best thing that you can do in such a situation. Following the right steps can help you retire confidently and peacefully.
Retirement Date
This is one of the most important things that matter. You need to talk to your HR or employer about your retirement. Determining a retirement date becomes important when you are almost there.
- You can submit a formal retirement notice that shows your clear consent that you are totally satisfied with this.
- Talk with your HR department and understand the exit process of the organization.
- Ask about your unclaimed benefits, pension, and unused leaves that are paid leaves.
- Make sure that your documentation is complete to get the best retirement options.
Retirement Budget
Make a retirement budget because after retirement, the savings, pension, and other benefits are the only source of income that you can have. Review all your debts and your monthly budget to get the most out of your retirement savings. Always make a budget including all the expenses so that a small variation may not affect your finances drastically.
Also, if you are in your 50s or 60s, then don’t miss that chance of making the catch-up contributions (mostly $7500) that most of the retirement saving accounts like 401(k) and IRA allow for people over this age. Housing, groceries, insurance, travelling, vacations, etc, are the expenses that you need to consider in your retirement budget.
Retirement Income Sources
Review all your retirement income sources that you can have in your retirement. These are the qualified sources that you may have from the government, your employer, your pension, and other sources you are eligible for. Some sources are:
- Social Security
- Pension plans
- 401(k), 403(b), IRA withdrawals
- Annuities
- Investment income
These are the most common sources that almost every employee can have in retirement. What to do 6 months before retirement.
Consult With A Financial Advisor
In a time when retirement is just 6 months away, you need to consult with an expert financial advisor to get the best decision-making capabilities. With the help of an advisor, you can make effective retirement strategies and modify some previously made plans based on your current goals. An expert will help you to make withdrawal plans, optimize tax strategies, and adjust investments.
Without relying on estimations, an expert will clear all doubts like how to start the retirement process, so you can easily and effectively.
Social Security
Social Security Benefits can be accessed from the age of 62 years. However, the longer you wait to start collecting the funds, the more you will get afterwards. Social security benefits are one of the best income sources that people get in the USA. Understanding the pros and cons of early or late withdrawal becomes as important as it is. Review your benefits on SSA.gov if you are near retirement, to avoid any loss of growth potential.
Lifestyle Changes
Finance is not the only part of retirement, but it covers the overall transition of the life of a person. You can make a simple weekly routine that includes the small trips, working on hobbies, and other stuff that you want to do. This transition affects the overall lifestyle of a person, whether we talk about housing and daily budget, or about travelling, or living with your family. Hence, asking what to do 6 months before retirement makes a lot of sense.
Documentation
Prepare all the legal documents to avoid any issues related to authorization. The legal affair needs to be managed accordingly before the retirement. This includes will decisions, power of attorney, living wills, beneficiary selection, etc. You need to consult with an estate expert who can help you manage all these concerns easily and productively.
Tax Implications
Taxation is one of the most common concerns that many individuals have in their minds. And this is also an important factor that needs high attention. When you retire, your retirement saving falls into a tax bracket. Not all like in Roth options of 401(k), IRA, etc., the contributions are made from after-tax income, so the qualified withdrawals are completely tax-free.
When you start withdrawing money, this will be added to your annual taxable income. However, you will be free from the early withdrawal penalty after the age of 59½ years. After this, you can withdraw without facing any penalty. Consult with a financial advisor to avoid any unnecessary tax implications.
How Many Months Ahead Should I Apply For Social Security Benefits?
In the context, what to do 6 months before retirement, the social security is a major topic to understand. Social security benefits are a good income source for individuals after retirement. For a good result, you can start the application process for social security benefits at least 3 months before you want to take the first check. This will help in avoiding any delay in receiving the funds as per your desired date. The Social Security Administration is responsible for all the activities of these types of benefits.
As mentioned, you need to start the application process at least 3 months before your desired receiving date. The minimum age at which you can start collecting the funds is 62 years. However, the longer you wait or delay the payout, the larger the amount you will have as your social security benefits. And delaying till the age of 70 will give you the maximum benefits amount which can possible.
You can apply for social security benefits through the official site ssa.gov, which is more convenient than any other method. Also, you can go to your nearest Social Security office and book an appointment. You’ll need documents like your birth certificate, W-2 forms, or self-employment tax returns.
Conclusion :-
The time just before retirement is very crucial, and in this phase, it becomes very important to work on every related aspect. So, asking what to do 6 months before retirement seems very natural and genuine. Fixing things before retirement will help in optimizing the overall lifestyle that you are going to adopt. By making a pre-retirement checklist, you can ensure the completeness of all essential factors of this course.
Don’t wait until the last moment, because many things like pension processing, unused leaves claiming, etc., take time, and working on these issues early, or at least 6 months before retirement, will give you enough time to manage all these things.
Frequently Asked Questions
When to tell your employer you’re retiring?
We all know that when an employee leaves a company then they need to give a pre-notice. If your retirement age is near, then you can give a notice to your employer at least 3- 6 weeks before your retirement. Also, if you are a very senior member in your organization, then you need to give this notice 2-3 months before the retirement date.
What is the perfect retirement age?
The perfect retirement age is 62 years for most of the departments. After this age, you are officially allowed to make distributions from your retirement savings and other income sources. Also, if your employer allows, then you can work longer to increase the savings potential and income strategy.
Will I receive full benefits at 67 if I retire at 62?
The age of 62 years is the official retirement age. After this, you can start taking the funds from your Social Security benefits. However, if you delay the payout till the age of 67 or 70, then you can get the maximum amount of social security benefits. Withdrawing at the 62 years age will reduce the income potential.
