What to Do When You Retire, in the Order the Deadlines Arrive

One Marketplace enrollment choice in the 60 days after you retire can cost a couple $18,000 to $24,000 in premiums for a single year. The cause is picking the wrong health plan just as a subsidy cliff that sat suspended for years came back. It's one of nine decisions that land the moment you stop working, and few people plan the order they arrive in. So here's what to do when you retire, in the order the deadlines arrive.

Lock down health coverage in the first 60 days

Retire before 65 and you're not on Medicare yet, so you have 60 days to bridge the gap. There are two paths. COBRA extends your old employer's plan: 60 days from the end of coverage to elect it, 102% of the full group premium, and up to 18 months. The ACA Marketplace gives you a special enrollment period that also closes 60 days after you lose coverage, with the plan starting the first of the next month.

Most retirees default to COBRA because it's familiar and keeps the same doctors. For higher earners with savings, that's often the wrong call. The ACA subsidy cliff came back this year, after a temporary fix expired. For a 2026 Marketplace plan it sits at $62,600 of modified adjusted gross income for a single filer and $84,600 for a two-person household. Go one dollar over and your entire subsidy drops to zero. For a couple in their early 60s, crossing that line adds $1,500 to $2,000 a month. Model your income first to keep the subsidy, then pick the plan.

Handle the 401(k) before you roll it over

The day you retire, your 401(k) custodian sends a welcome packet with instructions to roll the account into an IRA. It's a 10-minute call, and for most retirees it's the right move. For a smaller group, it forfeits two tax breaks that only exist while the money stays in the plan.

The first is the rule of 55. If you left your employer in the year you turn 55 or later, the IRS lets you pull from that specific 401(k) without the 10% early-withdrawal penalty. Roll it into an IRA and that's gone, back to the age 59 and a half rule.

The second is net unrealized appreciation on company stock. If you hold appreciated employer stock inside the 401(k), a strategy lets you pay long-term capital gains rates on it instead of ordinary income rates. It requires the whole account to be distributed in one calendar year, by December 31, with the stock coming out in kind. Cross into the next year with funds still sitting there and it's forfeited for good. Neither option is in the script the custodian reads you, so both deserve real thought first.

Fix the paperwork that decides where your money goes

Two forms and one update belong on the same day, before any rollover. Start with your beneficiary designations. It takes about 30 minutes, costs nothing, and ranks among the highest-impact moves here. The form on file with your custodian overrides your will nationwide, because federal law preempts state law on retirement accounts. Name an ex-spouse and the ex-spouse inherits. Name a sibling who has since died and the account goes to probate. Most people set these up 20 years ago and never touched them since, so update them now and they carry over with the rollover. Cover your retirement accounts, life insurance, brokerage accounts, and bank accounts.

Then file Form W-4P and W-4R on every source that pays you. W-4P sets federal withholding on pension payments; W-4R sets it on non-periodic distributions from 401(k)s and IRAs. The IRS redesigned both in 2023 and changed the defaults. With no W-4P on file, a pension administrator withholds as if you're single with no adjustments, so many retirees over-withhold all year and don't notice until they file in April. The W-4R defaults to 10%, but eligible rollover distributions carry a mandatory 20% you can't waive. Pick a withholding number that fits your tax situation rather than the default.

Build the cash bucket before the market tests it

Have 18 to 24 months of expenses in cash by the day you retire. A retiree drawing from a $1 million stock portfolio in 2000 had to sell shares into a falling market for the next two and a half years. By the end of 2009 that portfolio was down to roughly $480,000, half the money on the same starting balance. That's sequence of returns risk, and the only real defense is not being forced to sell when the market is down. A cash bucket buys you that, whether it sits in a high-yield savings account, a money market account, or short-term CDs. Build it on day one, because after the market drops it's too late.

Sequence your withdrawals around the cliffs

This is where the health-subsidy cliff meets everything else. Once you turn 63, your modified adjusted gross income runs two clocks at once: it sets your ACA subsidy now, and it sets your Medicare Part B premium two years out, because Medicare looks back two years. The first IRMAA surcharge starts at about $109,000 of MAGI for a single filer and adds about $81 a month to Part B plus $14 to Part D, roughly $1,150 per person a year for every year you're over the line. The tiers climb from there.

So which accounts you draw from becomes a sequencing problem. The default is to pull everything from the traditional IRA, since that's usually the biggest balance, but all of it counts as ordinary income that can push you past the ACA cliff and trigger IRMAA two years later. Spread the withdrawals across the traditional IRA, your Roth accounts, a taxable brokerage account, and cash when needed, so your taxable income stays under both cliffs.

Set your Social Security date and your estate documents

Pick your Social Security claim date and put it in writing. It interacts with your withdrawal and Roth conversion plans, and, if you're married, your spouse's claim and longevity. For a married couple, the higher earner usually waits as long as possible to grow that check while the lower earner claims earlier, so the survivor keeps the larger check for life. A single retiree with strong savings often delays, trading low-income years for Roth conversions while the check grows. Claiming early works when it lifts the income floor enough to cover expenses, letting the portfolio stay invested. Whatever you choose, write it down and tell your spouse so you don't drift.

Then refresh the estate documents: the will, the power of attorney, healthcare directives, and any trust. If you have a trust, confirm your titled assets are actually inside it, because plenty of trusts get created and then hold nothing. And a will guarantees probate, so if you want your heirs to skip its time and cost, look at a transfer-on-death designation or a revocable living trust.

Run the survivor stress test while you're both healthy

Couples skip this one because it's uncomfortable, and it may carry the biggest impact of anything here. The day one spouse dies, the survivor's income and taxes change overnight, and the default math is not friendly. The tax brackets roughly halve: the 22% bracket for a married couple is $211,400 in 2026, and for a single filer it's $105,700. The standard deduction gets cut about in half too. Required minimum distributions keep coming at full size because the IRA balance hasn't changed, only now they're compressed into single-filer brackets. Social Security drops from two checks to one, and while the survivor keeps 100% of the higher earner's check, that can still be about half of what the household had.

One of the biggest fixes lives in the account structure: shifting money into Roth accounts early, while you still have the couple's wider brackets to work with. The day you retire is the best time, because that's when your brackets are widest and your Roth conversion runway is longest. The longer you wait, the more those windows close.