5 Essential Questions to Ask Before you Retire
- Travis Tsukayama, CFP® CFA
- Oct 17
- 9 min read
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After a lifetime of working, a person approaching retirement will start feeling anxious about the next phase of their life. This is natural – retirement can bring big changes in lifestyle, financial circumstances, and perspective. As financial planners, we often hear from people less than one year from retirement. Their questions vary in topic, but the root of their concern is “getting it right” in retirement. [Scroll to the bottom of the page for a free copy of our guide “What Issues Should I Consider Before I Retire?” - https://www.andrewsllc.com/].
What does “getting it right” in retirement mean? In my experience, for most people it is as simple as creating a retirement that:
1) Ensures they will never have to go back to work out of necessity.
2) Accomplishes their financial and legacy goals in a tax-efficient way.
In this article, I’ll break down the Five Questions to ask yourself to prepare for a successful retirement. You’ll learn:
How to simplify planning for retirement by focusing on what matters.
The approach a professional financial planner takes when laying the groundwork for retirement.
What important areas are missed when people DIY retirement planning.
Question 1: What am I retiring to?
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It’s perhaps the most important question and it has nothing to do with your finances.
You’ve been planning for the financial side of retirement for years. For good reason – switching from steady work income to living off savings and Social Security benefits is a major transition. But you may not have given much thought to the other ways your life drastically changes in retirement.
One client told me the first six months of their retirement felt like the start of summer vacation. For many, the alarm clock gets set for later and their daily schedule is re-arranged. The structure of a workday is replaced by a blank slate. It can be a much-needed break, but the relief can be short-lived.
Over time, the need to have a purpose returns. Some people are eager to go back to work, others start on expensive home renovation projects, and some become full-time grandparents.
Asking clients what they are looking forward to in retirement has become a staple in our conversations. It helps us understand what that unique individual or couple wants in their dream retirement or uncovers a need to dig into the question deeper.
Some items to consider:
Where you plan to live in retirement (will you downsize or move to another city/state/country?)
The lifestyle you envision (hobbies, travel, family time, volunteer work)
Where you will find the structure of a daily routine, social connection, and sense of identity.
Question 2: How much income will I need to comfortably retire?
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In Question 2, you can finally dive into the numbers.
Take out a notepad (or open an excel spreadsheet 🤓) and make a list of your expenses.
Estimate Annual Retirement Expenses
Essential living costs: housing, utilities, groceries, insurance, transportation
Healthcare: premiums, out-of-pocket costs, long-term care potential
Discretionary spending: travel, dining, gifts, entertainment, charitable giving
Taxes: income taxes on tax-deferred IRA/401(k) withdrawals, realized capital gains, interest and dividends, Social Security benefits, pension income
Inflation: assume 2–3% annual increase in expenses over time
Tip: Start with your current annual spending and adjust for expenses that will decrease (commuting, payroll taxes) or increase (healthcare, leisure).
By separating your essential and discretionary spending, you will get a better sense of how flexible your spending is if adjustments should be necessary in the future.
Identify All Sources of Income
Next, you’ll want to make a list of all your sources of income in retirement.
Social Security benefits (including any spousal or survivor benefits)
Pension and annuity benefits
Retirement accounts (IRA and 401k)
Taxable savings accounts (brokerage and trust accounts)
Rental real estate income
Business or part-time work income
Decide on a Withdrawal Strategy
Now you have listed your expenses on one side of the paper and income on the other.
Once you’ve done this exercise, you can visualize the shortfall or surplus of your guaranteed income compared to expenses.
Many people do not bring in enough from Social Security and pension to completely cover their expenses. They will need to start withdrawals from retirement accounts to bridge the income gap.
Part of this step involves evaluating your retirement accounts:
Take inventory of current account balances and what type of accounts they are held in.
Review the asset allocation of investments. Are changes required now that you’ll be retired?
What rate of return do you expect from your investments?
Finally, decide on a withdrawal strategy.
I’ve written about the safe withdrawal rate in past blog posts [Retirement Withdrawal Strategies: Does the 4% Rule Still Work Today?].
When drawing from retirement accounts, retirees want to balance portfolio longevity with spending intentionally especially during the early, active years of retirement.
The most successful retirement spending plans I’ve worked on have been for retirees with clear goals and organized expense/income information.
Question 3: How will my tax situation change in retirement?
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When you retire, prepare for a change in your tax situation. [Tomorrow's Tax Problem]
Tax Treatment by Income Source
Your earned income from work goes away and is replaced by other sources of income. Here is a list of how each of those sources could be taxed differently.
Social Security: Up to 85% of benefits are taxed as ordinary income.
Pension: Typically taxed as ordinary income at the federal level. May be exempt from state taxes (as is the case in 15 states including Hawaii.)
Withdrawals from tax-deferred IRAs and 401ks are taxed as ordinary income.
Withdrawals from Roth IRAs and Roth 401ks are not taxed since taxes were already paid on contributed funds.
Taxable accounts: Capital gains tax rates and qualified dividend tax rates apply [Capital Gains and Losses: How to Strategically Lower Your Tax Bill].
Required Minimum Distributions (RMDs)
Most people are aware that distributions are required at a certain age. Knowing the rules regarding RMDs and actually taking them are a separate issue that can cause confusion.
A client who just turned 73 recently told me she didn’t need the income from her RMD. Her pension and Social Security benefits are enough to cover all her spending. “Why do I need to take it,” she wondered, “if I don’t need the spending money?”
I understand the sentiment. It’s the IRS who mandates that RMDs be taken each year once an individual turns age 73. But there are some key points to know about taking your RMD:
Once you’ve taken your RMD, you have the option of reinvesting it in a taxable account. That allows the money to continue earning interest and growing while satisfying the mandatory distribution. The RMD will still be taxed as ordinary income.
You can’t reinvest the RMD in a Roth IRA. But if you are still working, you can send the RMD to a bank account and then make a direct contribution to a Roth IRA assuming you meet the eligibility requirements.
Gifts to charity made directly from your IRA are called Qualified Charitable Distributions [Charitable Giving Strategies for Retirees: How to Maximize Your Tax Benefits ]. They can satisfy your RMD while granting you the tax benefit without needing to itemize deductions. A win-win.
Opportunities for Tax Planning
The change in your income situation provides a unique opportunity for tax planning.
When work earnings stop and before Social Security benefits start, most people find themselves in a lower tax bracket.
I met with a couple in their early 60’s who retired at the same time. Neither had started Social Security benefits yet. When we projected their income for the year, most of it was from their taxable accounts and interest income. Their tax bracket projected to be much lower than it was when they were working and lower than it would be in the future once Social Security benefits and RMDs start.
Their tax planning involved significant Roth conversions over the next few years to use up the lowest tax brackets. Retirees in their mid-60’s must also be aware of how income affects their Medicare premiums (called IRMAA). These tax strategies may not apply to those working given higher levels of income. Retirement opens the door for additional tax planning.
Question 4: How will I pay for medical costs in retirement?
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Rising healthcare costs are a reality for many of today’s retirees. The numbers are astounding:
A 2025 study by Fidelity found that the average retired couple at age 65 can expect to spend $315,000 on healthcare expenses in retirement.
A 2018 Health and Retirement Study found that for the median retiree, 25% of their Social Security benefits went towards medical costs.
While working, most people have an employer-sponsored medical plan. Upon retirement, it becomes necessary to review how medical costs will be paid.
Medicare Basics
Medicare is available to all Americans beginning at age 65. It’s not free of charge and doesn’t cover everything. Here is what it can cover:
Part A (hospital insurance): inpatient hospital care, skilled nursing, in-home medical care
Part B (medical insurance): doctor visits, medical tests, x-rays, medical supplies
Part D (prescription drug coverage): prescription medications
Medicare Supplement or Medicare Advantage (Part C)
If there are still gaps in your medical coverage after starting Medicare, you may consider a Medicare supplement policy (Medigap) or Medicare Advantage (Part C) for additional cost.
Long Term Care
Long term care is not a covered expense under Medicare. If you need long term care in the future, you have the following options to cover the cost:
Long term care insurance
Self-funding through your savings
Medicaid (only available if assets and income are below the threshold)
Stay on your Spouse’s Medical Plan
If your spouse is still working but you’ve retired, you may be able to be added onto their employer-health coverage. Doing so may increase your premiums, but it may be more cost-effective or provide better coverage than finding your own plan. Check with the employer’s HR department before making any changes.
Question 5: Who do I want to get my stuff when I’m gone?
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“A good plan is like a road map: it shows the final destination and usually the best way to get there.” – H. Stanley Judd
The last question we’ll cover today to “get it right” in retirement relates to your estate plan.
Put simply: who gets your stuff when you go?
First, Get Organized
To create an effective estate plan, you first need to know how much “stuff” you have and where its located. This includes a list of all financial assets, real estate, tangible assets, and digital assets.
Once you have updated your balance sheet of assets and liabilities, you must decide who will be involved in helping distribute the assets and who will be inheriting.
Create Estate Planning Documents That Work
Drafting estate documents is the critical next step which memorializes your wishes. Finally, action must be taken to retitle accounts and assets into your trust or name beneficiaries.
Your estate plan should be comprehensive, clear, and updated regularly [Avoiding the BIGGEST Estate Planning Mistake Retirees Make]. It allows you to dictate to your loved ones how your financial and medical affairs will be handled or name a trusted agent who will make those decisions when you’re unable to.
In the event of your medical incapacity, having an updated trust and power of attorney document allows your agent to assist with your financial and medical decisions.
Working with an estate attorney is a good idea to ensure your documents are drafted correctly and abide by the state laws of where you live.
Beneficiary Designations
Besides having an updated will and trust, you should also review your beneficiaries regularly.
Beneficiary designations are made on retirement accounts, brokerage and bank accounts, life insurance policies, and more. For your retirement accounts, naming a beneficiary will be done in lieu of retitling those accounts into the name of your trust – although you can name your trust as a beneficiary is some cases.
It’s wise to review who your beneficiaries are. I’ve seen more than one case of a deceased family member left on as a beneficiary, which can involve unwanted probate if not corrected.
Putting it All Together
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