15 Things to Do if You're Retiring Next Year

Saying goodbye to the working world forever isn't just something you should do on a whim. You'll need plenty of advanced planning to make certain you're really ready.

If you're anticipating quitting next year, there are 15 tasks to start working on today to shore up your financial situation and prepare to start living off your savings. Here's what they are.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

If you're just a year or less away from retiring, it's time to kick investing into high gear.

This means maxing out retirement plans such as a 401(k) and IRA -- including catch-up contributions. These are extra contributions you're allowed to make once you hit age 50. For example, in 2021, the 401(k) contribution limit is $19,500, but with catch-up contributions, it comes up to $26,000.

If you're within a year of retirement, you can get a very accurate estimate of what your Social Security benefits will be by signing into your online account. Do that ASAP so you can see how much your retirement checks would be at different claiming ages.

Taking this step can help you decide if you want to claim benefits right away upon retiring or try to wait a little to raise the amount of your monthly checks.

Confirming your benefit amount also helps you make sure you'll actually have enough money to retire on schedule next year. If you discover you won't, it's time to make alternative plans.

You aren't going to be able to live on Social Security alone, so when you retire you'll likely have to start making withdrawals from your retirement accounts.

With the date of your departure from the workforce impending, you'll have to plan for how much to safely take out of your accounts each year without risking running out of money.

Research different approaches such as the 4% rule so you can make an informed choice.

Once you know your Social Security income and the amount you can withdraw from retirement accounts, you can accurately estimate the amount of money you'll have available when you retire next year.

Do the math now to assess exactly what you'll be bringing in after your paychecks stop. If you find out you won't have enough money, you can start looking into alternatives such as postponing retirement or saving a lot more in the coming year.

ALSO READ: If I Were Behind on Retirement Savings, This Would Be My Game Plan

If your employer is covering your insurance now, you'll need a new plan for next year.

If you'll be 65 when you retire, you can get Medicare coverage. But you'll probably still need additional protection such as from a Medigap or Medicare Advantage plan. Start looking into these types of coverage now so you can find out the costs and make sure they'll work for you.

If you won't be 65 yet when you retire, you'll need some other coverage. This could come from COBRA or an Affordable Care Act plan or your spouse's employer if they will still be working. Explore all three choices and assess the costs of each so you're prepared to pay these bills.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Your tax situation will change next year when you retire. You'll need to know how that shift will affect your bills since taxes impact your take-home income. This means learning how both the federal government and your state tax Social Security benefits.

Just 13 states impose taxes on Social Security benefits, so you'll only need to worry about this if you live in one. But the federal government taxes part of your benefits once provisional income reaches $25,000 for single filers or $32,000 for married joint filers.

Provisional income is half of Social Security checks, taxable income, and some income that isn't taxable. You can calculate yours and see if you'll lose part of your checks to the IRS.

Many retirees move to a smaller home after leaving work. This could enable you to eliminate your mortgage payment or potentially cash in on some equity if your home is paid off and you move to a smaller place.

Changing homes could also reduce property taxes, maintenance expenses, and a host of other costs.

Since this decision will affect the income available to you, start to consider it now as you make your retirement plans. It could take some time to get your home ready to sell, so you may want to begin prep work sooner rather than later.

ALSO READ: Thinking of Downsizing in Retirement? You May Want to Do It Before Your Career Ends

Once you've researched your key costs, including housing, taxes, and healthcare, you should be able to make a pretty detailed budget for your retirement spending.

Doing so now will give you the information you need to see if your income will stretch far enough. If not, you can start making adjustments now such as preparing to locate to a smaller home or a place with a lower cost of living.

If your retirement savings is in a workplace 401(k), start considering whether you'll keep it there or do a rollover into an IRA, which could potentially reduce your fees and give you access to more investment assets.

A rollover becomes an option after leaving work, but it can take time to research all your options and make an informed choice.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

An emergency fund is even more important once you have a fixed income as a retiree.

If you don't already have several months of living expenses saved up for retirement, get serious about saving a hefty emergency fund ASAP so it's ready when you retire next year.

ALSO READ: Why Retirees Still Need an Emergency Fund

Once you retire next year and start living off your investment accounts, you'll need to be ready to make withdrawals to cover your costs. This means you can't always wait out a downturn if the economy goes south.

To ensure you don't have to sell stocks at an inopportune time, it's a good idea to have enough money in cash to cover as much as two to five years of living expenses. Start preparing for this now so you have the cash you need set aside to see you through troubled times.

Having the right asset allocation is especially crucial when you're within a year of leaving work or after retiring. You can't afford to be exposed to too much risk or too little risk at this point in your life when you have little time left to recover.

Ensure an appropriate percentage of your portfolio is in the market (subtract your age from 110 to estimate the amount). If you're too heavily invested in equities or in a particular type of asset, rebalance now.

It's ideal if you can pay off debt before retiring so you don't have to worry about covering interest costs with retirement assets. So, develop a debt payoff plan and put as much money as you can toward eliminating your debts over the next year.

It's good form to let your company know well in advance that you're retiring so they can search for your replacement and you'll have time to provide training.

Consider how early you want to provide notice and make a plan for when and how you'll talk with your boss.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Finally, take the time to think about what you'll do after leaving work. Making plans now can help you to ensure you have the money to support your hobbies. It can also help you stave off boredom once you no longer have work to fill your days.

With just a year left until retirement, there's no time to waste. Start taking care of these 15 steps today, so you'll be ready to give notice soon with the confidence of knowing your financial affairs are in order.

The Motley Fool has a disclosure policy.