Once the date is in sight there are some pre-retirement must dos. Whether you are prepared for it or not, once you skip out your employer’s door for the last time you will be entering the retirement twilight zone. A place where you are neither here nor there. It’s a place in the middle ground between employee and retiree. Unnoticed or unaccounted for, it can disrupt what could have been a beautiful experience and cause us to kick ourselves for missing it.

In the weeks before retiring there is much on our minds. We occupy our thoughts about controlling our happiness and trying to make sure we get everything at work done or handed off in time. All our years of retirement planning are now set into motion and being realized. However, in the weeks before retirement there are a few details to manage. Little details that are easily overlooked until it becomes obvious that we should have paid closer attention to them. It’s about small picture things that if missed have financial impacts and possibly having a large annoyance factor during a time when we just want to celebrate and start our next phase of life.

Photo by Aziz Acharki on Unsplash

Countering the Retirement Twilight Zone: Easily Overlooked Moves In The Weeks Before Retirement That Should Be Managed

So much of our lives is on autopilot. We get scheduled paychecks, bills are due on certain dates, and we pay little attention to details because as long as things remain static, it all works out. But retirement is a change to things. A big change. Autopilot will no longer apply and assumptions can sting you. The moment you walk out the office door for the last time everything changes. Even though you and everyone in your orbit knows you are retired, the rest of the world hasn’t got, or shall I say, processed that memo yet. You are in the retirement twilight zone. Here are some things to add to your checklist in the weeks before retiring.

Start By Having Enough Cash Available

Do you have enough cash available to cover your retirement funding for up to 3 months? This is all about being able to transition your bill payments during the start of your retirement. Your retirement twilight zone time-frame may not last 3 months, but depending on your unique circumstances it just might.

We usually plan intensely and way ahead for our long-term retirement funding. We know what income to expect coming to us and what our budget is or will be. The problem is that a lot of the systems and processes we will depend on to make it happen takes time to implement. Although most of us get paid in the rears and will at least get a partial paycheck after retiring, maybe even some unused vacation time, it may not be enough. We need to have readily available cash to cover this retirement twilight zone while we are still transitioning from employer paychecks to our retirement funding to keep our bills paid. The time when this digital financial world sees us as neither here (employed) nor there (retired). We’re in the in-between place and it takes having enough cash to get through it. 

Give Attention To Your 401K

This autopilot retirement savings platform will come to a crashing halt no matter what you do. But there may be ways to leverage the most from of it if your plan was to roll it over to an IRA. If you get a company match, do you know when that match is made? Is it with each pay period or at the end of the month? Does it depend on your employment or just having an active 401K account? Are there special rules associated to retirement like prorated match, etc?

Use the weeks before you retire to check. Find out and set a plan. Don’t do anything like closing it out too early with a rollover and causing you to miss a match-payment. If you have no 401K match to gain, make an active decision whether you still want to contribute to it on your last paycheck. Decide if getting that extra cash on your last paycheck is more beneficial for your short-term retirement twilight zone funding. If retirement account rollovers are part of your long-term retirement funding strategy, then be aware that it can take a week or more to complete everything in order to begin your retirement funding plan.

Auto Account Debits Need Looked At

Many of us have automatic debits against our savings or checking accounts to fund all kinds of things. I had a monthly debit to fund both mine and my wife’s Roth IRAs. That and auto transfers from my checking account where my paychecks were auto deposited to my savings account. It’s necessary in the weeks before retiring to make a conscious decision to look at our autopilot account debits. Decide whether to conserve immediate cash or stay the course to continue funding or top-off the other accounts.

Will You Be Depending On A Pension?

It is a fortunate thing to have a pension to help fund our retirement. But many have some very detailed rules and long processing time-frames. If you are depending on that monthly pension check then your retirement twilight zone is certain. Don’t assume a seamless income experience. Expect neither a paycheck nor a pension check for a period of time. Find out every detail about your plan’s retirement processing.

For example, the company I worked for had rules like the first pension money would be released on the last day of the second month after retirement. Ok, we’re on our own for 2 months. But it also said that any retirement pension request processed after the 15th of the month would be considered processed in the following month. What!!? So, depending on what day you sent in your paperwork you may have added to your retirement twilight zone time-frame.

Even Social Security has some processing lag time. In the weeks before your retirement reaffirm your knowledge of your pension plan’s ins and outs and strategically send in your paperwork.

Health Insurance Transition

Do you know when your employment based health insurance ends? Most plans end on the last day of the month you retire in. If you retire at the end of the month, then you need to be ahead of this since you will immediately lose coverage. You may need to apply for your company’s Cobra benefit to bridge past your retirement twilight zone. Even Medicare takes time to begin if you were in job lock waiting for your eligibility. Know when your new retirement health insurance coverage will begin. Also, don’t forget to use up your Healthcare FSA (Flexible Spending Account) money before you retire. Its “use it or lose it” rules means anything left in your FSA goes away when you walk out the door for the last time.

Everyone’s retirement is unique. There are all kinds of little details that need attention. Inventory everything you have on autopilot and how much cash you have available to use while things work through their processes. Figure out how to cover any financial gaps because there will always be lag time between your last day in the rat race and when your big picture retirement plan can start doing its thing.

In the weeks before retiring, concentrate on and manage the little picture details to get you through the retirement twilight zone, that in-between place retirees experience until everything catches up and recognizes us as retired.