Retirement Countdown: Key moves when you're 1 year away

When you're younger, retirement is the sort of thing you might find yourself daydreaming about often. When you're at the tail end of your career and it's close to becoming reality, it can be thrilling and daunting at the same time.

If you're a year away from retiring, it's important that you use the next 12 months to set yourself up for success. Here are some key moves to make.

RETIREMENT SERIES

Part 1:When you're 30 years away

Part 2:When you're 10 years away

Part 3:When you're 5 years away

Finalize your retirement budget

If retirement is only 12 months away, at this point, you should have a pretty clear sense of what it'll cost to cover your expenses. Map out a budget that includes not only essential bills like housing and transportation, but lifestyle expenses like travel and hobbies.

When creating that budget, make sure you're accounting for taxes. You might total your expenses and discover you need an annual income of, say, $90,000 to enjoy your desired lifestyle. But if that $90,000 is after taxes, it means you'll need a larger total income to do all of the things you want to do.

Read:Why more seniors are working past retirement age

Decide when to claim Social Security

Unless you buy an annuity, Social Security may be your one source of guaranteed retirement income for life. So it's important to claim your benefits carefully.

You can begin collecting benefits as early as age 62. But your monthly payments will be permanently reduced if you don't wait until full retirement age (or later) to file, which is 67 for anyone born in 1960 or later. Social Security also lets you delay your claim for larger benefits. Each year you wait beyond full retirement age gives your monthly checks an 8% boost, up until age 70.

When thinking about when to claim Social Security, ask yourself:

• Do I plan to work in retirement? If so, you'll be subject to an earnings test if you claim benefits before full retirement age.
• How's my health? If it's not great, claiming benefits early could lead to more lifetime income.
• What's best for my spouse? If you're married and you're the primary earner in your household, waiting to file could leave your spouse with larger survivor benefits if they outlive you.

Figure out what you'll do for health coverage

If you're planning to retire at age 65 or later, you may be able to transition from a workplace health plan to Medicare. But if you won't be 65 on your retirement date, you'll need to secure different health coverage.

Some interim options to bridge the gap until Medicare include:

• COBRA, which allows you to continue your workplace coverage
• Coverage through your spouse's employer plan
• Private insurance
• A Marketplace plan under the Affordable Care Act (ACA)

Keep in mind that depending on your income, you may qualify for subsidies that make an ACA plan more affordable. If you don't, then it may make sense to pay for COBRA until you're eligible for Medicare if you're looking at a fairly short gap (18 months or less). That way, you get the benefit of staying on the health plan you're used to.

Determine how much annual income your nest egg will give you

If you're a year away from retirement and are set on that date, there's limited time to continue building savings. So it's important to know what annual income to expect out of your nest egg in its current state.

One rule of thumb financial planners like to use is a 4% withdrawal rate that's adjusted for inflation through the years. With a $2 million nest egg, a 4% withdrawal rate gives you $80,000 in annual income your first year of retirement, with inflation-based boosts as needed.

However, to safely use a 4% withdrawal rate, you should aim for a fairly even stock/bond split in your portfolio. A very conservative portfolio may yield smaller returns, forcing you to adjust your withdrawal rate downward. The timing of your retirement matters, too. If you're retiring early, a 4% withdrawal rate may be too aggressive and put you at risk of depleting your savings. If you're retiring well into your 70s, a 4% rate may be needlessly limiting.

Build a cash cushion

A stock market crash early on in retirement, or right at the start, could be catastrophic for your portfolio. And later market crashes aren't a great thing, either.

You should expect a fair amount of market volatility throughout retirement. But a good way to protect yourself from it is to build a cash cushion. Your cash cushion could make it possible to leave your investments untouched during a market decline, allowing your portfolio to recover fully. A good bet is to keep at least two years' worth of living expenses in cash, which gives you a decent amount of time to ride out a market downturn. For even more peace of mind, aim for three years' worth of expenses in cash.

Rebalance your portfolio

When you're 12 months away from retirement, it's time to unload some risk in your portfolio. That doesn't mean dump your stocks completely, but rather, decide on a starting allocation you're comfortable with. You may decide that you don't want more than half of your portfolio in stocks once you're retired. If that's the case, but you're 70% invested in stocks now, you have 12 months to gradually roll back and shift into bonds.

Also make sure your portfolio is diversified within each asset class you own. The stock portion of your portfolio, for example, shouldn't all be in tech stocks or bank stocks or consumer goods stocks. It's important to own stocks that give you exposure to different corners of the market. Now may be a good time to start looking at dividend ETFs for the built-in diversification. As always, check with your own financial planner for what may be best for you.

See if a gradual transition is possible

Going from full-time work to retirement overnight can be emotionally jarring. Though you may be looking forward to the freedom that comes with being retired, it can also be a tricky adjustment. That's why you may want to see if a more gradual transition is possible.

Talk to your employer about a phased retirement. That could mean working a few days a week or shorter days for a few months past or ahead of your initial retirement date. And if your employer won't support that, consider consulting to bridge the gap between leaving your job and retiring for good.

Figure out what you're retiring to

A big part of retirement planning is making sure you have enough money, the right health coverage, and a solid Social Security strategy. But it's equally important to figure out what you actually plan to do with your time once you're no longer working.

That could look like a lot of different things. You may already have plans to join a gym, golf with local friends once a week, and start a gardening club. Or, you may be planning to do a lot of travel early in retirement and spend the weeks in between helping out with your grandkids. The key is to have an idea of how you'll keep busy rather than wing it completely. While not having to deal with the constraints of a work schedule can be freeing, a complete lack of structure could throw you for a loop.

The bottom line

Your final working year before retirement gives you an opportunity to solidify plans and boost your confidence. To that end:

• Finalize your budget
• Figure out when to claim Social Security
• Create a health coverage plan
• Calculate your available annual income
• Build a cash cushion
• Shift your portfolio into safer assets
• Consider a gradual transition
• Come up with an actual game plan for how you'll spend your days

And also, give yourself a huge pat on the back for plugging away for decades and getting to this stage. You may be itching to retire, so let the final countdown begin – and make sure to enjoy the tail end of your career along the way.

This retirement series produced by Nifty 50+ for TheStreet

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This story was originally published June 10, 2026 at 8:47 AM.