The year before you retire determines how smoothly the transition goes. Use this month-by-month guide to handle healthcare, Social Security, tax planning, and withdrawal strategy — the four things that make or break early retirement finances.
Month-by-Month Pre-Retirement Timeline
| Months Before | Task |
|---|---|
| 12 | Finalize retirement budget; estimate all income sources |
| 12 | Decide Social Security claiming age |
| 10-12 | Research healthcare options (ACA marketplace, COBRA, Medicare) |
| 10-12 | Max out 401(k) and HSA contributions |
| 9-10 | Meet with a fee-only financial planner |
| 8-9 | Create tax-efficient withdrawal strategy |
| 6-8 | Use remaining employer benefits (dental, vision, EAP) |
| 6 | Begin test-driving retirement budget |
| 4-6 | Start Roth conversion planning (if applicable) |
| 3 | Apply for Medicare (if turning 65 within 3 months) |
| 2-3 | Give notice to employer |
| 1-2 | Confirm all benefits transition dates |
| 1 | Build 12-month cash buffer in savings |
| 0 | Retire |
Final Year Contribution Maximums (2025-2026)
| Account | Under 50 | Age 50-59 | Age 60-63 |
|---|---|---|---|
| 401(k) employee | $23,500 | $31,000 | $34,750 |
| Traditional/Roth IRA | $7,000 | $8,000 | $8,000 |
| HSA (individual) | $4,300 | $5,300 | $5,300 |
| HSA (family) | $8,550 | $9,550 | $9,550 |
Front-load contributions early in the year to maximize tax-deferred growth in your final working year.
Healthcare Decision Tree: Year Before Retirement
| Your Situation | Best Option |
|---|---|
| Retiring at 65+ | Enroll in Medicare Parts A, B, and supplement (or Advantage) |
| Retiring at 62-64 | ACA marketplace (may qualify for subsidies based on retirement income) |
| Retiring at 60-61, spouse works | Join spouse’s employer plan |
| Retiring before 60 | ACA marketplace + bridge to Medicare |
| COBRA available | Use for up to 18 months while you sort longer-term coverage |
Social Security: The Final Decision
| Claiming Age | Monthly Benefit (example) | Annual Benefit | Breakeven vs. 67 |
|---|---|---|---|
| 62 | $1,750 | $21,000 | N/A — permanently reduced |
| 64 | $2,000 | $24,000 | N/A |
| 67 (FRA) | $2,500 | $30,000 | Baseline |
| 70 | $3,100 | $37,200 | Age ~82 vs. claiming at 67 |
Delaying from 67 to 70 = 24% increase. If you’re healthy and have other income to bridge the gap, waiting to 70 is one of the best financial moves available.
First-Year Withdrawal Strategy
| Income Source | Timing |
|---|---|
| Cash savings / money market | Use first to avoid selling investments in a down market |
| Taxable brokerage account | Sell appreciated holdings at favorable capital gains rates |
| Traditional 401(k) / IRA | Withdraw up to the top of a low tax bracket |
| Roth IRA | Use last — let it keep growing tax-free |
| Social Security | Delay if possible for higher permanent benefit |
Employer Benefits: Use Before You Lose
| Benefit | Action |
|---|---|
| Dental insurance | Complete all pending dental work |
| Vision insurance | Get eye exam, order glasses/contacts |
| Medical | Annual physical, specialist visits, screenings |
| FSA balance | Spend it — you lose it when you leave |
| HSA balance | Keep it — it’s yours forever |
| Life insurance | Check if convertible to individual policy |
| EAP (counseling) | Use free sessions if helpful |
| Tuition reimbursement | Complete any in-progress education |
The Bottom Line
Your final year of work is the most financially consequential year for your retirement. Use it wisely: max out contributions, lock in healthcare, finalize your Social Security strategy, and build a cash buffer. The decisions you make in these 12 months affect your income for the next 25-30 years.
Related: Things to Do 5 Years Before Retirement | Financial Checklist Before Retirement