Making the transition into retirement is one of the most important times in our financial lives. We're faced with many decisions and we're more than likely dealing with the most money we've ever had to manage.

Here are seven things you can do before you retire to make the transition easier:

  1. Create a net-worth statement

    Where do you stand right now financially? To find out, create a net-worth statement. This process will show you how much you own as a family, how much is held in each person's name, how much progress you're making on paying off debt (such as your mortgage) and whether your retirement savings are on track. You'll need to think about those issues as you prepare to retire.

  2. Check your company benefits

    Find out what you can expect from your company once you retire. For example, if you have a company retirement plan or a pension plan, you need to know what your distribution options are. Also investigate stock-option restrictions, whether your company will provide your health insurance during retirement and other special retirement-related programmes your company may offer.

  3. Re-examine your asset mix

    Take a look at your current asset allocation and determine whether you should modify that mix once you retire. One of the biggest questions people ask at retirement is how should my portfolio change? In many cases, it won't need to change at all. As people live longer and retire earlier, it's not unusual to see retirement periods span 20 to 35 years. That's a long time and you'll need to position your portfolio for continued growth. That means keeping a substantial amount of your portfolio invested in stocks. How large an equity stake will depend on your risk tolerance and how much longer you plan to invest the money.

  4. Plan your lifetime cash flow

    Think through your current budget and estimate what you might spend in retirement. Then, consider which pool of assets you want to pull from (e.g. your retirement annuities, your employer-sponsored retirement plan, your unit trusts, etc.) and in what order.

  5. Appraise your tax situation

    Determine how your tax bracket might change in retirement. If you'll be living on less income, for example, you may be able to adjust your tax. You may also be able to claim more deductions. Finally, figure out where you stand with capital gains and losses in your portfolio. As you consider making changes in your portfolio, you need to know if you'll trigger unwanted tax implications.

  6. Review your insurance coverage

    Once the kids are grown, you may need less life insurance. While there may be less of a need to insure for items such as paying off the mortgage or putting the kids through college, you may have new needs like liquidity for your estate plan. Life insurance can be a way for your heirs to pay any estate tax owed without forcing them to sell other assets.

  7. Update your estate plan

    See if your estate documents need to be updated and determine whether you should consider additional estate planning. Start by going through your net-worth statement and seeing what assets are in each of your names or held jointly.


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