What to Do 3 Months Before Retirement: Final Retirement Checklist & Planning Tool
POINTS
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Review income sources to optimize Social Security, pensions, and retirement withdrawals.
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Secure healthcare coverage by completing Medicare enrollment and comparing plan options.
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Plan retirement taxes by managing withdrawals, Roth conversions, and RMDs.
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Update legal documents including wills, powers of attorney, and beneficiaries.
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Adjust investments to balance growth, income, and retirement risk.
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Prepare for the transition by finalizing benefits, budgets, and lifestyle plans.
The final three months before retirement are the point when most retirement decisions become fixed.
Once you leave your job, changing benefit elections, payroll deductions, or employer-sponsored coverage may be limited or no longer possible.
This period gives you one last chance to address matters that are easier to handle while you’re still employed.
Am I on Track for Retirement? Check Your Progress
Social Security Claiming Strategies 3 Months Before Retirement
You need to check your SSA My Social Security account for benefit estimates.
Decide when to file:
- Benefits at age 62 are roughly 70% of full retirement age benefits
- Delaying until FRA gives 100%, and
- Waiting until age 70 increases benefits by about 8% per year.
If you are married, evaluate spousal benefits:
- Spouse can claim up to 50% of the worker’s FRA benefit.
- If eligible for both retired-worker and spousal benefits, filing triggers both, with SSA paying the higher amount.
| When | Do This | Decision to Make |
|---|---|---|
| Next 90 days | Review earnings record and benefit estimates | Confirm your projected benefits and claiming options |
| Before choosing a filing date | Compare claiming ages | Decide whether early cash flow or higher lifetime income matters more |
| Mid-plan | Coordinate with spouse | Choose a household claiming strategy |
| 3+ months before benefits start | File with SSA if ready | Confirm start month and Medicare timing |
| Before retirement income changes | Review taxes | Manage IRA withdrawals, Roth conversions, and MAGI |
| Annually | Revisit plan | Adjust for health, markets, tax rules, or family changes |
How About Pension Decisions? (Lump Sum vs. Annuity)
If you have a defined-benefit pension with a lump-sum option, gather the plan’s payout forms and a lump-sum valuation.
You can also use third-party calculators to compare.
- Consider an annuity for steady lifetime income, especially if you or a spouse have longevity to protect.
- Lump sum gives flexibility and control, useful for debt payoff or inheritance.
| Timing | Action Step | Key Questions / Decisions |
|---|---|---|
| Week 2–3 | Request official pension benefit statement showing lump-sum value, annuity options, payment amounts, and survivor benefit choices. | What options are available? How do the monthly income options compare with the lump-sum value? |
| Early planning stage | Review options with a financial advisor and evaluate retirement income needs. | Do you prioritize guaranteed income, flexibility, investment control, or leaving assets to heirs? |
| Before retirement election deadline (often 90–180 days before retirement) | Finalize and submit pension election. | Choose between lump sum and annuity based on health, longevity, risk tolerance, and spouse needs. |
| Before accepting a lump sum | Decide rollover strategy. | Can a direct rollover preserve tax deferral and avoid immediate taxation? |
| After election | Integrate pension choice into retirement plan. | Adjust investments, withdrawals, taxes, and survivor planning based on the decision. |
Retirement Account Withdrawals & Taxes
For traditional IRAs/401(k)s, RMDs begin at age 73 under current law.
For 401(k) accounts while still working and not a 5% owner, you can delay RMD until retirement year.
But make sure to schedule and take any RMDs by year-end to avoid penalties. Roth IRAs have no RMD while you live, but beneficiaries do.
| When | Action | Key Decision |
|---|---|---|
| By Day 30 | Map accounts, income sources, and future RMD dates. | Identify taxable, tax-deferred, and Roth assets. |
| Early retirement | Create withdrawal sequence. | Decide between taxable-first, tax-bracket smoothing, or a blended approach. |
| Low-income years (Months 30–60) | Evaluate Roth conversions. | Convert enough to improve future tax flexibility without creating excessive tax or Medicare costs. |
| Before age 59½ (if applicable) | Review withdrawal rules. | Avoid unnecessary penalties and use exceptions only when appropriate. |
| Annually | Reassess strategy. | Adjust for taxes, markets, income changes, and Medicare premiums. |
Medicare & Healthcare Review
For those approaching 65, the Initial Enrollment Period (IEP) is 7 months.
So, you need to sign up for Part A (hospital) and Part B (medical) during the IEP to avoid lifetime penalties.
If you or your spouse are still working past 65 and covered by creditable employer health insurance, you can delay Part B enrollment until after coverage ends.
After leaving coverage, sign up for Part B within 8 months to avoid penalty. If you miss these, use the January–March General Enrollment Period (coverage starts July 1, plus late penalties).
| Feature | Original Medicare + Extra Coverage | Medicare Advantage Plan |
|---|---|---|
| What is it? | Medicare coverage from the government, with optional plans added for more protection. | A private insurance plan that combines Medicare benefits into one plan. |
| Best for people who want… | More freedom to choose doctors and hospitals. | A simple plan with extra benefits included. |
| Choosing doctors | You can usually see any doctor or hospital that accepts Medicare. | You usually choose from the plan’s network of doctors. |
| Prescription medicines | You usually need to add a separate prescription drug plan. | Prescription drug coverage is often included. |
| Monthly costs | May cost more each month, but expenses can be easier to predict. | May have lower monthly costs, but you may pay more when you use care. |
| Dental, Vision & Hearing | Usually need separate coverage for many extra benefits. | Many plans include dental, vision, hearing, and other extra benefits. |
| Travel | Usually offers more flexibility when traveling within the United States. | Coverage may depend on the plan’s rules and provider network. |
| Good choice if you… | Want flexibility and don’t mind managing multiple plans. | Want everything in one plan and prefer convenience. |
Timeline:
Immediately (by Day 30) research and enroll in Medicare Parts A/B when first eligible.
During months 30–60, compare plans: use Medicare.gov Plan Finder for Advantage/Part D.
Enroll in Part D by Dec 7 if delaying or during OEP if needed. Shop Medigap in your 6-month window after Part B starts.
Use Up Your Final Workplace Benefits Before Retirement
1. Unused PTO/Vacation
Federal law does not require payout of unused vacation; this is state- or employer-specific.
So, check your employer’s policy and state labor laws. If owed, coordinate with HR to include it in your final paycheck.
2. Retiree Health/Benefits
Next, you need to confirm any retiree health insurance eligibility and costs.
Some employers subsidize retiree premiums; others end coverage at termination.
This way, you need to plan accordingly. Verify if your employer offers a health savings account (HSA) after retirement and its rules.
3. 401(k) and 403(b) Plans
You can roll over these into an IRA or a new employer’s plan to keep tax-deferred growth.
Contact the plan admin for a direct rollover to avoid 20% withholding.
Any withdrawal not rolled over will be taxable. Watch the one-rollover-per-year rule for IRAs; prefer direct trustee-to-trustee transfers.
4. Stock Options/RSUs
Next, review plan rules: vested stock options may have a limited exercise window (often 30–90 days post-termination).
RSUs often vest on a fixed schedule and are taxed as ordinary income when vested.
Please try to consider exercising options before your last day if required, and consult a tax advisor if needed.
5. Other Benefits
If we are feeling a bit greedy (jk, of course), we can spend any FSA/HSA funds if possible before losing eligibility.
Look into retiree discounts or memberships.
6. Last Day Offboarding Tasks
During your final weeks, meet up with your HR for an exit checklist.
ADP recommends covering all outstanding benefits and accounts:
- Arrange PTO payout
- Review COBRA and retiree benefits, and
- Finalize 401(k) rollovers.
Return company property and obtain documents such as retirement plan summaries and insurance continuation paperwork.
Ensure your IT access, like your email and VPN, is disabled on departure and personal contacts are backed up.
Do You Need Budgeting & Cash-Flow Modeling?
Well, you do need to create a Retirement Budget.
List all
- Expected income (e.g., Social Security, pension, part-time work, rental income) and
- Expenses (housing, taxes, healthcare, insurance, utilities, food, transportation, leisure).
Include seasonal and one-off costs.
Sample Monthly Budget (Illustrative):
| Category | Monthly | Annual |
|---|---|---|
| Income | ||
| Social Security | $2,000 | $24,000 |
| Pension | $1,000 | $12,000 |
| 401(k)/IRA Withdrawals | $1,500 | $18,000 |
| Part-time Work | $500 | $6,000 |
| Investments (Dividends) | $200 | $2,400 |
| Total Income | $5,200 | $62,400 |
| Expenses | ||
| Housing (Rent/Mortgage) | $1,500 | $18,000 |
| Utilities | $300 | $3,600 |
| Food | $500 | $6,000 |
| Health Insurance | $400 | $4,800 |
| Medications / Out-of-pocket Health | $200 | $2,400 |
| Transportation | $300 | $3,600 |
| Taxes (Federal/State) | $300 | $3,600 |
| Misc./Leisure | $400 | $4,800 |
| Total Expenses | $3,900 | $46,800 |
| Net Cash Flow | $1,300 | $15,600 |
You can also model different retirement scenarios by adjusting investment returns, spending levels, or withdrawal rates. For example, many retirees use an initial 4% to 5% withdrawal rate as a starting guideline.
Keep an emergency fund in safe, liquid assets, and update your retirement projections whenever a major life event occurs, such as higher healthcare costs or delaying your Social Security benefits.
Do Your Investment Needs Adjustments 3 Months Before Retirement?
Yes, your investments often need some adjustments in the months before retirement, but three months before retirement is usually not the time for a complete portfolio overhaul.
Asset Allocation
Shift your portfolio toward lower volatility and income generation.
But many retirees adopt a balanced mix (e.g., 40–60% stocks, rest bonds/cash), then gradually tilt more conservative.
Growth Projection
Asset Allocation
Allocation Breakdown
Investment Options
Income-Focused Investments
Consider adding bonds, dividend-paying stocks, or annuity products for regular income.
Make sure you have some inflation protection for long-term costs.
Is Your Lifestyle Supposed to Change in Retirement?
Yes and no. It depends.
Retirement doesn’t automatically mean you should live a smaller life.
It usually means your lifestyle changes from being centered around work and earning income to being centered around time, health, relationships, and personal priorities.
- Housing: Decide whether to stay, downsize, or relocate.
- Work/Volunteering: Many retirees work part-time for income or fulfillment. Explore jobs or volunteer roles that match your skills and schedule.
- Social Engagement: Cultivate hobbies, clubs, and social networks. Join senior centers, alumni groups, faith communities, or volunteer organizations.
- Budget for Lifestyle: Incorporate any new costs (e.g., travel, hobbies, pet care, potential eldercare for parents or spouse).
How to Prepare for Your Last Day at Work When 3 Months End?
In the final month, make sure all your paperwork is completed.
- Confirm your retirement date with HR
- Collect documents: final paycheck details, retirement plan/401(k) enrollment forms, insurance discontinuation forms, and any stock plan statements.
- Get written confirmation of COBRA or retiree health options.
- Notify Team/Clients as appropriate
- Return keys, IDs, and company devices.
