November 2025
Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension
The years before retirement are an important time to build wealth, reduce debt, and explore future housing options, healthcare coverage, and post-work activities. Below are eight steps for pre-retirees to consider to increase their financial well-being in later life:
- Do a Retirement Savings Calculation- Use at least three online calculators to determine how much savings you need to reach a personal retirement savings "number." Below are three available tools:
- Increase Savings Contributions- Try to save as much as you can up to the maximum allowed. At age 50+, take advantage of additional "catch-up" retirement savings contributions allowed by tax law for workers age 50+: in 2025, an additional $7,500 for employer plans like a 401(k) or 403(b) plan ($31,000 total) and an additional $1,000 for IRAs ($8,000 total). Workers age 60 to 63 have a $11,250 catch-up contribution.
- Pay Off Debts- Aim to pay off all consumer debt (e.g., credit cards, car loan, personal loans, and student loans) by retirement, as well as a home mortgage. Consumer debt elimination is faster when you can trim variable expenses (think food, eating out, utilities, and gas) and use debt acceleration methods such as avalanche (pay extra on high-interest rate debt first) or snowball (pay extra on smallest balances first).
- Estimate a Retirement Budget- Base your future budget on current income and expenses and tweak the numbers for expected income sources and living costs in retirement. Make sure that the numbers are realistic and research future expenses as needed (e.g., Medicare Part B and D premiums, travel, and dental costs without insurance). Online tools such as this one can help you crunch the numbers.
- Check Your Social Security Record- Go to SSA.gov/myaccount, create an account, and download a benefit estimate statement. Review your earnings history for accuracy and the projected benefit amount for ages 62 through 70. Note the difference in benefits at various ages. You can begin receiving benefits as early as age 62, but your monthly payment will be permanently reduced by as much as 30%.
- Decide When to Claim Social Security- Consider that, at full retirement age (FRA), you will receive your full Social Security benefit. Your monthly benefit will then increase for every month you delay past FRA up to age 70. Key factors to consider in decisions about benefit claiming age are personal health, anticipated life expectancy, financial need, and other income sources like a pension or reverse mortgage.
- Consider Future Expenses- Make detailed "reconnaissance trips" to scout out potential places to live if you are planning to relocate. In addition, evaluate future housing needs and consider downsizing or upsizing (e.g., room for an aging parent), as appropriate. Also determine if future health benefits are available from an employer and, if so, what it takes to qualify for them. Then brush up on the basics of Medicare coverage.
- Evaluate Post-Work Options- Decide whether you want a "clean break" from paid work, a "phased retirement," entrepreneurship, a new job, and/or volunteer work and start exploring opportunities. You may also decide to provide extensive care-giving for an aging parent or grandchild. You can use your time any way that you want once you retire. If you plan to work part-time or start a business, consider starting a "side hustle" before you retire to build skills and contacts.