Retirement planning checklist Find helpful retirement

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Use this checklist to guide you through one of the vanguard.com/checklist
most exciting stages in your financial life—preparing to retire!

Save as much as you can in your retirement accounts.

• Save 12% to 15% of your pay each year for retirement, including employer contributions if you’re
investing in a retirement plan at work.
• Think about opening an IRA, and decide which type (traditional or Roth) makes more sense for you.
• Make it a priority to save the maximum you’re allowed. The annual IRA contribution limits for 2016
increase at age 50 to $6,500 (from $5,500 for those younger than 50). For both traditional and Roth
401(k)s, the annual contribution limits for 2016 increase at age 50 to $24,000 (from $18,000).

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Don’t be shy about asking for professional advice.

• Think about whether you’re comfortable making upcoming decisions on your own and whether
you want to spend time maintaining and updating your plan as your circumstances, your
investments, and regulations change.
• If not, consider hiring a Vanguard personal advisor, who will develop a customized retirement plan
that’s based on your goals and financial situation, and then guide and coach you as much as you
want.

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Simplify your portfolio.

• Consider whether you have a clear, accurate picture of your complete investment portfolio.
• If not, think about consolidating your accounts at Vanguard to get simplified reporting, low costs,
and the opportunity to save on fees.

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Prepare a budget for your expenses in retirement.
• Your retirement budget might not be too different from your current one. But remember that in
retirement, you’ll likely spend less on payroll taxes, income taxes, and your work wardrobe, and
perhaps more on hobbies or travel.
• Remember to plan for medical costs, including medical insurance, which you may currently receive
through your employer.

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Plan to pay off your debt.

• Will you retire before you pay off your mortgage, cars, or credit cards? Make sure you understand
the implications of retiring with debt, and have a plan to pay it off.

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Consider purchasing an annuity.

• If your fixed expenses exceed your monthly income, or if you’re concerned about outliving the
money you’ve saved for retirement, think about annuitizing part of your retirement savings.
• Consider whether you’d want payments that continue for your lifetime, or just for an agreed-upon
number of years. Also consider whether you’d want to defer starting the payments until a certain
age, to lower the cost to purchase the annuity.

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Plan to withdraw from your retirement accounts.

• You’ll need to consider how to make your savings last for the duration of your retirement, how to
make the withdrawals tax efficiently, and whether you need to take required minimum
distributions (RMDs) from your IRA or 401(k).
• Familiarize yourself with important dates. At age 59½, you can withdraw from your IRA and
401(k) without incurring the 10% federal early withdrawal penalty. By law, you must start taking
taxable RMDs from your retirement accounts no later than April 1 in the year after you reach age
70½. If you don’t, you could owe a penalty of up to 50% of the amount you should have
withdrawn.

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 Sign up for Medicare and Medigap.
• Medicare is a federal health insurance program. At age 64 and 9 months you have a seven-
month initial Medicare sign-up window; if you miss it, you may have to pay higher premiums for
life. But if you still have medical insurance provided by an employer, including your spouse’s
employer, you can postpone enrolling in Medicare until that coverage ends without having to pay
higher premiums later. Medicare coverage can begin as early as the first day of the month in which
you turn 65.
• Medigap is Medicare supplemental insurance; it’s private insurance that covers some of the out-of-
pocket copays and deductibles of Medicare. The six-month enrollment window for Medigap begins
on the first day of the month in which you turn 65. During this enrollment window, you can’t
be denied Medigap coverage or charged extra because of poor health. But if you miss the
enrollment deadline, you may pay higher premiums for life or even be denied coverage.

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Determine the age at which you’ll retire.

• You’ve already calculated your expected expenses. You’ll also need to know your expected
retirement income (from Social Security, pensions, annuities, investments, and other sources).
• Then make sure your projected income is greater than or equal to your expenses.

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File for your Social Security retirement benefits.

• You’re eligible to receive reduced benefits at age 62. But at age 66–67, you reach Social
Security full retirement age (FRA), the age at which you qualify for your full Social Security
retirement benefits. And if you wait to claim your benefits beyond your FRA, their value will
continue to increase each month you delay until you reach age 70.
• As shown in the chart below, your FRA depends on the year you were born:

Year of birth Full retirement age

1943–1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67

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All investing is subject to risk, including the possible loss of the money you invest. Advice services are provided by Vanguard Advisers,
Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.

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