images (4)If you’re a decade or so away from retire­ment, you’ve prob­a­bly spent at least some time think­ing about this major life change. How will you man­age the tran­si­tion? Will you trav­el, take up a new sport or hob­by, or spend more time with friends and fam­i­ly? Should you con­sid­er relo­cat­ing? Will you con­tin­ue to work in some capac­i­ty? Will changes in your income sources affect your stan­dard of living?

When you begin to pon­der all the issues sur­round­ing the tran­si­tion, the process can seem down­right daunt­ing. How­ev­er, think­ing about a few key points now, while you still have years ahead, can help you focus your efforts and min­i­mize the anx­i­ety that often accom­pa­nies the shift.

Reassess your liv­ing expenses 

A step you will prob­a­bly take sev­er­al times between now and retirement–and maybe sev­er­al more times thereafter–is think­ing about how your liv­ing expens­es could or should change. For exam­ple, while com­mut­ing and oth­er work-relat­ed costs may decrease, oth­er bud­get items may rise. Health-care costs, in par­tic­u­lar, may increase as you progress through retirement.

Try to esti­mate what your month­ly expense bud­get will look like in the first few years after you stop work­ing. And then con­tin­ue to reassess this bud­get as your vision of retire­ment becomes reality.

Accord­ing to a recent sur­vey, 38% of retirees said their expens­es were high­er than they expect­ed. Keep­ing a close eye on your spend­ing in the years lead­ing up to retire­ment can help you more accu­rate­ly antic­i­pate your bud­get dur­ing retirement.

Con­sid­er all your income sources 

First, fig­ure out how much you stand to receive from Social Secu­ri­ty. In ear­ly 2016, the aver­age month­ly retire­ment ben­e­fit was about $1,300. The amount you receive will depend on your earn­ings his­to­ry and oth­er unique fac­tors. You can elect to receive retire­ment ben­e­fits as ear­ly as age 62, how­ev­er, doing so will result in a reduced ben­e­fit for life. If you wait until your full retire­ment age (66 or 67, depend­ing on your birth date) or lat­er (up to age 70), your ben­e­fit will be high­er. The longer you wait, the larg­er it will be.

You can get an esti­mate of your retire­ment ben­e­fit at the Social Secu­ri­ty Admin­is­tra­tion web­site, You can also sign up for a my Social Secu­ri­ty account to view your online Social Secu­ri­ty state­ment, which con­tains a detailed record of your earn­ings and esti­mates for retire­ment, sur­vivor, and dis­abil­i­ty ben­e­fits. Your retire­ment ben­e­fit esti­mates include amounts at age 62, full retire­ment age, and age 70. Check your state­ment care­ful­ly and address any errors as soon as possible.

Next, review the accounts you’ve ear­marked for retire­ment income, includ­ing any employ­er ben­e­fits. Start with your employ­er-spon­sored plan, and then con­sid­er any IRAs and tra­di­tion­al invest­ment accounts you may own. Try to esti­mate how much they could pro­vide on a month­ly basis. If you are mar­ried, be sure to include your spouse’s retire­ment accounts as well. If your employ­er pro­vides a tra­di­tion­al pen­sion plan, con­tact the plan admin­is­tra­tor for an esti­mate of that month­ly ben­e­fit amount as well.

Do you have rental income? Be sure to include that in your cal­cu­la­tions. Might you con­tin­ue to work? Some retirees find that they are able to con­sult, turn a hob­by into an income source, or work part-time. Such income can pro­vide a valu­able cush­ion that helps retirees post­pone tap­ping their invest­ment accounts, giv­ing the assets more time to poten­tial­ly grow.

Some oth­er ways to gen­er­ate extra cash dur­ing retire­ment include sell­ing gen­tly used goods (such as fur­ni­ture or design­er acces­sories), pet sit­ting, and par­tic­i­pat­ing in the shar­ing economy–e.g., using your car as a taxi service.

Pay off debt, pow­er up your savings

Once you have an idea of what your pos­si­ble expens­es and income look like, it’s time to bring your atten­tion back to the here and now. Draw up a plan to pay off debt and pow­er up your retire­ment sav­ings before you retire.

Why pay off debt? Enter­ing retire­ment debt-free–including pay­ing off your mortgage–will put you in a posi­tion to mod­i­fy your month­ly expens­es in retire­ment if the need aris­es. On the oth­er hand, enter­ing retire­ment with a mort­gage, loan, and cred­it-card bal­ances will put you at the mer­cy of those month­ly pay­ments. You’ll have less of an oppor­tu­ni­ty to scale back your spend­ing if necessary.

Why pow­er up your sav­ings? In these final few years before retire­ment, you’re like­ly to be earn­ing the high­est salary of your career. Why not save and invest as much as you can in your employ­er-spon­sored retire­ment sav­ings plan and/or IRAs? Aim for max­i­mum allow­able con­tri­bu­tions. And remem­ber, if you’re 50 or old­er, you can take advan­tage of catch-up con­tri­bu­tions, which enable you to con­tribute an addi­tion­al $6,000 to your 401(k) plan and an extra $1,000 to your IRA in 2016.

Man­age taxes 

As you think about when to tap your var­i­ous resources for retire­ment income, remem­ber to con­sid­er the tax impact of your strat­e­gy. For exam­ple, you may want to with­draw mon­ey from your tax­able accounts first to allow your employ­er-spon­sored plans and IRAs more time to poten­tial­ly ben­e­fit from tax-deferred growth. Keep in mind, how­ev­er, that gen­er­al­ly you are required to begin tak­ing min­i­mum dis­tri­b­u­tions from tax-deferred accounts in the year you turn age 70½, whether or not you actu­al­ly need the mon­ey. (Roth IRAs are an excep­tion to this rule.)

If you decide to work in retire­ment while receiv­ing Social Secu­ri­ty, under­stand that income you earn may result in tax­able ben­e­fits. IRS Pub­li­ca­tion 915 offers a work­sheet to help you deter­mine whether any por­tion of your Social Secu­ri­ty ben­e­fit is taxable.

If leav­ing a finan­cial lega­cy is a goal, you’ll also want to con­sid­er how estate tax­es and income tax­es for your heirs fig­ure into your over­all decisions.

Man­ag­ing retire­ment income to result in the best pos­si­ble tax sce­nario can be extreme­ly com­pli­cat­ed. Qual­i­fied tax and finan­cial pro­fes­sion­als can pro­vide valu­able insight and guidance.

Account for health care 

In 2015, the Employ­ee Ben­e­fit Research Insti­tute report­ed that the aver­age 65-year-old mar­ried cou­ple would need $213,000 in sav­ings to have at least a 75% chance of meet­ing their insur­ance pre­mi­ums and out-of-pock­et health-care costs in retire­ment. This fig­ure illus­trates why health care should get spe­cial atten­tion as you plan the tran­si­tion to retirement.

As you age, the por­tion of your bud­get con­sumed by health-relat­ed costs (includ­ing both med­ical and den­tal) will like­ly increase. Although orig­i­nal Medicare will cov­er a por­tion of your costs, you’ll still have deductibles, copay­ments, and coin­sur­ance. Unless you’re pre­pared to pay for these costs out of pock­et, you may want to pur­chase a sup­ple­men­tal Medi­gap insur­ance pol­i­cy. Medi­gap poli­cies are sold by pri­vate health insur­ers and are stan­dard­ized and reg­u­lat­ed by both state and fed­er­al law. These plans cov­er cer­tain spec­i­fied ser­vices, but offer dif­fer­ent com­bi­na­tions of cov­er­age. Some cov­er all or part of your Medicare deductibles, copay­ments, or coin­sur­ance costs.

Anoth­er option is Medicare Advan­tage (also known as Medicare Part C), which allows Medicare ben­e­fi­cia­ries to receive health care through man­aged care plans and pri­vate fee-for-ser­vice plans. To enroll in Medicare Advan­tage, you must be cov­ered under both Medicare Part A and Medicare Part B. For more infor­ma­tion, vis­it

Also think about what would hap­pen if you or your spouse need­ed home care, nurs­ing home care, or oth­er forms of long-term assis­tance, which Medicare and Medi­gap will not cov­er. Long-term care costs vary sub­stan­tial­ly depend­ing on where you live and can be extreme­ly expen­sive. For this rea­son, peo­ple often con­sid­er buy­ing long-term care insur­ance. Pol­i­cy pre­mi­ums may be tax deductible, based on a num­ber of dif­fer­ent fac­tors. If you have a fam­i­ly his­to­ry of debil­i­tat­ing ill­ness such as Alzheimer’s, have sub­stan­tial assets you’d like to pro­tect, or want to leave assets to heirs, a long-term care pol­i­cy may be worth considering.

Ease the transition 

These are just some of the fac­tors to con­sid­er as you pre­pare to tran­si­tion into retire­ment. Break­ing the big­ger pic­ture into small­er cat­e­gories and using the years ahead to plan accord­ing­ly may help make the process a lit­tle easier