What To Do 6 Months Before Retirement

Table of Contents

Preparing for Retirement is a significant financial milestone, and knowing what to do 6 months before retirement can help ensure a smoother transition into your next chapter. This guide details the critical financial, administrative, and lifestyle actions you should prioritize half a year from your planned retirement date, using up-to-date checklists and official best practices under U.S. retirement policy.

Direct Answer

Review your anticipated retirement income sources and compare them with your projected expenses, updating your budget for changes in insurance, taxes, and healthcare (see Social Security and Medicare resources).
Contact your employer’s HR or retirement benefits administrator to confirm pension/401(k) payout options, final contribution dates, and paperwork deadlines.
Apply for Social Security benefits if eligible (can be filed up to 4 months before desired start); confirm Medicare enrollment, as most should sign up by age 65 to avoid penalties.
Evaluate your investment portfolio and asset allocation to reduce risk and increase liquidity, consulting with a qualified advisor if needed.
Gather required documents (proof of age, work history, beneficiary designations) for retirement plan and Social Security applications.
Address outstanding debts and avoid taking on new obligations if possible.
Finalize plans for health insurance coverage (COBRA, retiree health plans, or Medicare supplements).
Confirm all key dates with plan administrators and verify with the IRS, SSA, and DOL for current requirements and forms.

Who This Applies To & Eligibility

Employees planning to retire within 6 months, including those with workplace retirement plans (e.g., 401(k), 403(b)), pensions, or Social Security benefits.
Self-employed individuals with IRAs or solo 401(k) plans approaching their desired retirement date.
Public sector and military personnel nearing service retirement.
Anyone eligible for Medicare, Social Security, or retirement health benefits in the U.S. (typically age 62+ for reduced Social Security, age 65+ for Medicare; check official eligibility details as rules may change).
Eligibility criteria and options vary by employer, plan type, and jurisdiction; confirm with your plan administrator and official agencies.

Key Facts (At-a-Glance)

Item	Details
Plan/Program Type	Defined contribution (e.g., 401(k), 403(b)), defined benefit pension, Social Security, individual retirement accounts, public plans.
Contribution Limits	Annual caps apply; catch-up contributions allowed for those age 50+ (“sample/illustrative”: 401(k) salary deferral limits, IRS updates yearly).
Employer Match	Varies by employer and plan; usually ends with final paycheck.
Tax Treatment	Traditional (pre-tax, taxable on withdrawal) and Roth (after-tax, tax-free qualified withdrawals); Social Security income may also be taxable.
Vesting	Employer contributions may have vesting schedules; confirm you are fully vested before separation to maximize benefits.
Withdrawals	Typically allowed after age 59½; early withdrawals may incur penalties; exceptions for some plans.
RMDs	Required minimum distributions start by April 1 after turning 73 (sample/illustrative; confirm latest law on the IRS official site).
Fees	Plan administration and investment fees; review your Summary Plan Description (SPD) for details (“sample/illustrative” 0.25%-1% range typical).
Portability	Rollovers to an IRA or new plan permitted, subject to tax rules; cash-outs may trigger taxes/penalties.
Loans	Repayment required on separation or plan exit; rules vary, check with your plan administrator.
Beneficiaries	Update designations to ensure correct distribution of funds; keep documentation current with plan and Social Security administrators.

Contributions, Limits & Taxation

Employee pre-tax and/or Roth contributions are typically capped annually (IRS adjusts these limits; “sample/illustrative” for 401(k) and IRA limits—check latest numbers on the IRS official site).
Employer matching/matching contributions end with your last eligible paycheck; assess if an extra contribution is possible before retiring.
Catch-up contributions allowed after age 50; maximize these if possible in remaining pay periods.
Taxation depends on account: traditional accounts are taxed as ordinary income at distribution, while Roth accounts are tax-free if qualified.
Update or review your withholding elections; consider a meeting with a tax professional for projection.

Investments & Fees

Reassess your portfolio: many shift to lower-risk, more liquid options as retirement nears, but individual allocation should match your needs and risk tolerance.
Most workplace plans offer a menu including target-date funds, index funds, bond funds, and stable value funds.
Review all account-level and fund-level fees; official plan disclosures or SPDs list these figures and can be found on employer HR portals or by request.
For independent IRAs and brokerage accounts, verify fee schedules with your custodian; compare to industry averages when evaluating changes.
Schedule time to review your statements and clarify any questions with your plan provider.

Withdrawals, RMDs & Penalties

Standard penalty-free retirement account withdrawals start at age 59½ for most plans; exceptions may exist for certain 457(b), pensions, and public plans.
Early withdrawals are generally subject to a 10% IRS penalty unless an exception applies (review IRS hardship and exception rules).
Required minimum distributions (RMDs) must begin by April 1 of the year after turning 73 (“sample/illustrative”—check the latest age thresholds).
Missing an RMD can trigger substantial IRS penalties (up to 25% of amount not withdrawn; rules change frequently); monitor deadlines carefully.
Plan rollovers: Direct transfers to an IRA typically avoid immediate taxes; indirect rollovers may trigger withholding and deadlines (review official IRS rollover rules).

Examples & Scenarios

Scenario	Contribution	Tax Treatment	Withdrawal Timing	Notes
Jack, age 66, retiring in 6 months	401(k) maxed ($sample/illustrative)	Traditional, taxable at withdrawal	Eligible after separation; RMD begins by April 1 of year after turning 73	Social Security claimed at full retirement age for maximum benefit.
Maria, 62, defers Social Security	IRA catch-up contribution	Roth, tax-free withdrawals if qualified	Withdrawals delayed until later to minimize taxes.	Reviews savings withdrawals to optimize taxes and avoid early withdrawal penalty.
Sam, 59, public sector employee	403(b) deferrals	Pre-tax	Withdrawals possible after leaving service; some plans waive penalty at 55+.”	Pension lump sum or annuity payout options confirmed with benefit administrator.

Alternatives & Complementary Options

Traditional vs Roth withdrawals: Consider partial Roth conversions to manage taxes in low-income transition years.
IRA consolidations: Rolling old workplace accounts into a single IRA can simplify management—confirm compatibility with your plan and IRS limits.
Delayed Social Security: Waiting past age 62 increases monthly benefits; review trade-offs with the official SSA retirement resources.
Private annuities or employer pension buyouts: Additional sources of lifetime income, but require careful review of terms.

Comparisons

Side-by-Side Features

Feature	6-Month Retirement Checklist	Year-Before Retirement	Immediate Pre-Retirement
Contribution Limit	Finalize contributions, catch-ups	Maximize annual/catch-up	No new contributions (after separation)
Tax Treatment	Plan taxable and tax-free withdrawals	Project taxes; consider conversions	Trigger taxes on distributions/rollover
Withdrawal Rules	Set up/schedule withdrawals	Estimate cash flow needs	Take first withdrawals/RMD
RMD	Project RMD amount/timing	Estimate, plan for age 73+	Take first RMD (if age-eligible)
Fees	Review and confirm all fees	Assess impact of investment fees	No plan fees if rolled to new IRA

Administration, Forms & Deadlines

Gather key documents: Birth certificate, proof of Social Security number, marriage certificates, and beneficiary forms for retirement accounts.
Employer plan and pension paperwork: Request final distribution or annuity forms at least 2–3 months before retirement date.
Social Security: Submit application up to 4 months before benefit start; use the SSA’s official site for forms and details.
Medicare: Enroll during the 7-month window around your 65th birthday (or coordinate retiree insurance for earlier/later retirement).
Contact the Department of Labor or your plan sponsor for Summary Plan Description (SPD), fee disclosures, and official forms.

Risk Factors & Responsible Planning Notes

Market risk: Investment losses close to retirement may impact income. Most retirees move to lower-volatility or stable value funds in this period.
Longevity risk: Plan savings for a longer life than average; official sources (like the SSA) offer longevity calculators for projections.
Sequence-of-returns risk: Down markets at the start of your retirement drawdown may reduce portfolio sustainability.
Inflation risk: Review how fixed vs inflation-adjusted income sources (Social Security, pensions) will support your cost of living.
Health events: Set aside or arrange emergency and long-term care funds, and review insurance options with official sources.
Consult official agencies’ educational materials and, if needed, fee-only financial professionals for clarification—never rely solely on informal sources.

Frequently Asked Questions

When should I notify my employer of retirement?

Most employers require formal notice at least 2–3 months in advance; check HR policies for your organization’s requirements.
Some pension plans or unions have additional notification deadlines; confirm with your benefits office.

Is it necessary to pay off all debt before retiring?

Retiring with minimal debt increases cash flow flexibility, but not all debt is problematic if managed (consult official CFPB advice for details).
Prioritize paying off high-interest debt and understand any obligations that might impact pension or benefit eligibility.

What happens to my employer health insurance after I retire?

Coverage typically ends on your last day or at the end of that month unless retiree health benefits are offered.
You may be eligible for COBRA coverage for up to 18 months or need to transition to Medicare or ACA marketplace plans.

When do I have to take my first RMD?

RMDs usually begin by April 1 of the year after you turn 73 (confirm the current age threshold at the IRS official site).
IRAs and most employer plans follow these rules, but some plans may differ; always check with your plan administrator.

How should I adjust investments in the last 6 months before retirement?

Conventional advice suggests reducing exposure to risk assets, but the right allocation depends on your income needs, risk tolerance, and other sources of income.
Review options with your plan’s investment official or through an official agency’s educational materials.

Conclusion & Next Steps

Taking action 6 months before retirement is essential to secure income, benefits, and peace of mind as you make this significant transition.
Consult your employer’s HR, your plan provider, and official agencies such as the IRS, SSA, and DOL for updates and to confirm forms, deadlines, and eligibility rules.
If you are uncertain, use the resources at official sites or request official guides and checklists to ensure all necessary steps are completed before your retirement date.