Retiring in 2026: Are you really ready?

What successful professionals should double-check in the last 6 to 12 months before retirement.

Retirement may be right around the corner—or at least close enough that it’s starting to feel real. Whether you plan to retire in 2026 or you’re simply thinking ahead to the next few years, now is the perfect moment to run your plan through a quick “readiness review.” If you’re a successful professional with significant savings set aside – often $750,000 or more – this guide is designed with you in mind.

Many successful professionals ask me the same question:
“I’ve worked hard to build this life… but am I actually ready to retire?”

Below, we’ll walk through what’s changed since last year, what to double-check before stepping away from work, and how to avoid the missteps that trip up even the most diligent savers.

Changes for 2026 that may impact your retirement plans

A few important updates may affect your retirement strategy for 2026:

1. Higher retirement account contribution limits in 2026

For 2026, the IRS raised several key limits:

• 401(k), 403(b), and most 457(b) plans:
  • $24,500 annual employee deferral (up from $23,500 in 2025)
  • $8,000 age 50+ catch-up contribution
• Special “super” catch-up (ages 60 to 63): up to $11,250 on eligible plans
• Traditional and Roth IRA contribution limit: $7,500 for 2026

2. Healthcare cost estimates continue to rise for 2026

Healthcare remains one of the biggest retirement expenses. Recent national estimates show:

• A 65-year-old retiring in 2025 was estimated to need ~$172,500 for medical costs in retirement, up from $165,000 in 2024.
• For retirees with Original Medicare + Medigap, lifetime costs could reach $275,000+ for men and $313,000+ for women.

While these numbers are national averages, Massachusetts retirees often experience slightly higher costs due to regional pricing and plan selection. For example, in the Pittsfield, MA metro area, nursing home care averaged $140,890 to $153,300 a year (in 2024), 20 to 26% more than the national average of $111,325 to $127,750 per year!

3. A new tax deduction for seniors

The One Big Beautiful Bill Act (OBBBA) created a new tax deduction for seniors 65+ that goes into effect for the 2025 tax year. Some headlines framed it as “no tax on Social Security,” but in practice it’s an enhanced deduction that can reduce or eliminate federal tax for many lower- and middle-income seniors. The $6,000 deduction ($12,000 for married couples filing jointly) is available to those who are 65 or older by December 31 of the tax year, with income of $75,000 or below ($150,000 for married couples).

For seniors with higher incomes, the deduction phases out gradually, completely ending at $175,000 ($250,000 for married couples). This new deduction, which is due to expire in 2028, is worth discussing with your tax professional as part of your 2026 retirement plan.

Am I financially ready to retire in 2026?

As a financial advisor, it’s no surprise that I believe the cornerstone of retirement planning is understanding your financial picture, though it’s not all about the size of your nest egg. The biggest financial question to answer before retirement isn’t how much you can afford to spend, but how much you need to spend. Here’s where to focus:

What are my retirement expenses?

Check your spending

Do you really know how much you spend every month? I find that many people underestimate their monthly spending by as much as half, which can make or break your retirement plans.

I recommend you look back up to 12 months to capture all your annual recurring expenses. Look forward, too. Do you expect to need a new car next year? Or a new roof in three years? It’s worth taking the time to be thorough!

Include the cost of health care

It’s a common misconception that Medicare is free. Medicare Part A, which covers hospital stays, nursing facility care, and hospice has no premium (you paid for it in every paycheck), but the rest comes at a price. Whether you retire early and purchase private health insurance, or are 65 using Medicare, expect to pay premiums and out-of-pocket expenses throughout your retirement.

Don’t forget about taxes

Even in retirement, you’ll owe income taxes on withdrawals from your pre-tax accounts and on Social Security benefits and other income sources. Your actual tax liability will depend on a number of factors, so I recommend consulting with your tax professional.

Expecting the unexpected

Emergency home repairs, medical events, runaway inflation, recessions, family events, and other surprises can’t be predicted but can be planned for. Make sure you leave room for the unexpected in your retirement plan.

What’s my retirement income plan?

Most retirees today don’t have just one source of retirement income. Your retirement income may come from a mix of sources including:

• Social Security benefits
• Pensions and annuities
• 401(k), 403(b), and traditional IRAs
• Roth IRAs and other post-tax investments
• Savings accounts
• Business sale proceeds
• Rental properties
• Part-time work

Your age, account balances, and tax bracket will determine when you pull from certain retirement savings and what percentage of your income will come from each source every year. Don’t forget to think about income replacement strategies.

How long will my retirement savings need to last?

If you’re retiring at 62 instead of 70, it’s even more important to have confidence that your retirement savings will last. 

It may seem obvious but consider this:  retiring a year earlier doesn’t only mean you’ll need one more year of retirement savings – you’re giving up a year of income, likely at the top of your earning years. This can impact your Social Security benefit (based on your 35 highest-earning years) and your spending power because, as many retirees find out, it’s a lot easier to earn your salary than it is to save that same amount.

Critical retirement milestones

Age may be “just a number,” but in retirement, certain age milestones play a significant role in your expenses and income streams. Whatever your age, what matters most is whether you’re financially prepared to retire.

Retirement accounts unlock at 59 ½ years

With most retirement accounts, like traditional IRAs, Roth IRAs, 401(k), and 403(b) plans, making withdrawals before you reach age 59.5 will incur financial penalties. There are some exceptions that apply to select 401(k)s, 403(b)s, and 457 plans that allow for penalty free withdrawals at 55. If you’re retiring earlier, non-retirement investments and savings accounts are crucial.

Social Security retirement eligibility starts at age 62

If you were born on or after January 2, 1960, you won’t be eligible to receive your full Social Security retirement benefit until you reach 67. While you can begin collecting your benefit as early as age 62, you’ll greatly decrease the monthly benefit you can receive for the rest of your life (by as much as 30%), so consider this decision carefully.

Medicare eligibility begins at age 65

If you’re planning to retire before 65, you’ll need to secure your own health insurance. 

67: The full retirement age

If you were born on or after January 2, 1960, you become eligible for your full Social Security retirement benefit at age 67.

 Claim maximum Social Security benefits at age 70

The longer you wait to collect Social Security retirement, the larger your future monthly benefit check becomes – until age 70. Waiting until 70 to collect could make your Social Security checks up to 24% bigger than if you collected at 67.

Required minimum distributions (RMDs) start in your 70s

If you were born in or after 1960, you may be required to make specific withdrawals from your retirement accounts starting at age 75.

When is the best time of year to retire?

In my opinion, the best time to retire is when you’re ready, which will be different for everyone. However, if you’re ready to retire, but are struggling to set a final retirement date, it may be helpful to consider the following:

Retirement timing for lower taxes

If you’re a high earner, retiring at the start of the year instead of the end helps keep your income for that year low, meaning you’ll owe less income tax. This is especially helpful if you’re planning to check a lot of expensive items off your bucket list right away.

Retirement timing for job satisfaction

You may time your retirement to help your colleagues meet a big deadline, or you might opt to call it quits early to avoid the busy season.

Retirement timing for your family

You may wish to time your retirement so you can travel for a family occasion or spend time with a newborn grandchild. Or perhaps your spouse is scheduled to retire, and you want to retire at the same time.

Retirement timing for your lifestyle

If you’re having trouble choosing a date to retire, consider your hobbies, interests, and preferences. Retirement is a long way off for me, but I would plan to retire April 30, because May is my absolute favorite month and I don’t want to miss a single day of it.

The answer of the perfect retirement date is different for everyone. Skiers might choose to retire into peak snow season, Tanglewood aficionados might retire in time for July concerts, and if you’re a diehard baseball fan, maybe you retire in time to travel to spring training.

How to create a fulfilling retirement in 2026

Retirement isn’t just about financial stability, it’s also about maintaining your sense of purpose, holding on to you your identity, and staying active and healthy long term. The people who make the most successful retirement transitions are those who already have social engagements and hobbies outside their career. If you’re looking forward to retiring in the next year and you don’t have an active life beyond work, now’s the time to start filling in the blanks.

Explore hobbies, travel, or volunteering opportunities before you retire

Besides making sure you don’t miss out on life’s experiences, dipping your toe into new interests before retirement helps you to determine whether those activities are as fulfilling as you expected. For example, maybe you wanted to spend your retirement traveling the globe, only to find out you’re much happier here at home.

Traveling while you’re still working has a financial advantage, too. After all, if you’re using PTO, you’re literally getting paid to travel. 

Have a “trial retirement” by taking a sabbatical or moving to part-time work

Most employees work roughly 2,000 hours a year, or 160 hours a month. Do you really know how you’ll fill that time in retirement?

I typically recommend that soon-to-be retirees take an extended leave or reduce their hours before taking the plunge. This will give you a better sense of how you’ll spend your time and whether the activities you envision will fill your days in a meaningful way.

Explore your identity beyond your career

Roughly half (51%) of American workers say their job gives them a sense of identity (according to a 2016 survey by Pew Research). That number increases to 62% for self-employed workers and individuals in health care, 65% for those working in the nonprofit sector, 67% for government employees, and a staggering, though not surprising, 70% of those working in education. 

I encourage you to consider how you view yourself today and who you want to be tomorrow before reaching retirement. Having a clear identity outside of work can help you create a more fulfilling retirement!

How will you maintain social connections in retirement?

If you work full time, you may be spending 160 hours a month with your coworkers (love them or hate them, they’re still keeping you company). In a 2024 survey, about 2/3 of employees (66.22%) over age 54 reported having at least one close friend at work.

If you’re approaching retirement and are not currently engaged in community building activities outside of work, I strongly recommend you begin exploring your options now. Some great options for building new social networks and finding fulfillment include:

• Volunteering for a cause you care about
• Joining a choir, community orchestra, or theater troupe
• Attending events at your local senior center
• Joining a local hobby group
• Attending classes and workshops on topics that interest you
• Signing up to be a museum docent or theater usher
• Making recurring plans with other retirees in your community

Common retirement mistakes to leave in 2025

Even the most diligent lifelong savers can run into retirement drama if they:

• Underestimate healthcare and long-term care costs
• Forget to plan for taxes on retirement income
• Claim Social Security too early without understanding the long-term trade-offs
• Retire without a plan for how they’ll spend their time and maintain social connections
• Avoid reviewing or updating their estate plan and beneficiary designations

If any of these sound familiar, it may be a sign to pause and review your plans before setting a final retirement date. We’re happy to help!

Key takeaways: What to do if you’re planning to retire in 2026

Three key steps for professionals retiring in the next 12 months

Understand your expenses and income

If you’re going to retire in 2026, it’s critical that you know your expenses and income. Look at monthly and long-term expenses, expect the unexpected, and have a clear view of where your money will come from – whether it’s Social Security, investments, pensions, or some combination. And don’t forget about taxes in retirement!

Have a health insurance plan

Determine how you’ll cover healthcare costs in retirement. This is especially important if you’re retiring before Medicare eligibility begins (at 65).

Fill your days with purpose

Find something meaningful to keep you active, healthy, and engaged. Hobbies, social activities, and part-time work are all good options for finding fulfillment in retirement.

Four things to know if you’re retiring in the next 6 months

If you’re within 6 months of your retirement date, it’s even more important to have answers to these 4 crucial questions:

1. What is my plan for health insurance?
2. How will I withdraw the money you need to pay your bills?
3. Will I claim Social Security when I retire or at some point in the future?
4. Is my estate plan up to date?

Ready to retire in 2026? Let’s double-check the numbers!

As you approach your retirement date, your plan should begin to feel clearer and more doable. If not, we’re here to help!

If you’re planning to retire in 2026 or 2027, or are just wondering if it’s possible, our team is here to help you review your income, taxes, healthcare, and lifestyle considerations so you can move forward with confidence.