Preparing for Retirement: What to Consider at 59½

Most birthdays come and go without much effect on your daily life. However, turning 59½ is a unique financial milestone.

At this age, you may find new options that become available as you start preparing for retirement, your responsibilities start to change and decisions feel more real. You don’t have to make big changes right now. Instead, think of 59½ as a good time to pause, review your situation and get ready for what’s ahead.

Here are five important planning topics to consider at this stage, and why looking at them early can help you feel more ready for the future.

1. Retirement account flexibility and potential rollovers

When you turn 59½, some employer retirement plans let you take what’s called an in-service withdrawal. This means you might be able to move some of your retirement savings into an IRA, even while you’re still working and part of your employer’s plan.

Not all plans offer this option, and the rules may vary. Start by finding out what your specific plan allows. Keep in mind that the way funds are transferred or withdrawn can have tax consequences, so it’s important to understand the details and consider speaking with a tax advisor to determine what’s appropriate for your situation.

If you do have this option, moving some of your retirement savings can give you more flexibility. Some people use this time to organize their assets for future goals and keep tax benefits. Others want to see how different accounts can help with retirement income planning.

Keep in mind that traditional IRAs still require minimum distributions once you reach a certain age. Still, thinking ahead about how your assets are set up can help you plan your income more intentionally over time.

2. Tax choices today can shape future retirement income

Taxes don’t go away in retirement; they just change.

Turning 59½ is a good time to look at how your retirement accounts are taxed and how that could affect your income later. For example, some employers offer a Roth 401(k). You pay taxes on contributions up front, and under current rules, you don’t have to take required minimum distributions from a Roth 401(k) during your lifetime.

This can give you more flexibility in how your income is taxed in retirement. Since you’re not forced to take withdrawals, you might be able to lower your taxable income in some years.

These decisions don’t need to be all-or-nothing. Many people use a combination of traditional and Roth accounts to create flexibility over time. The value at this stage is found in understanding the trade-offs and how future contribution choices can complement existing assets.

Learn more: Am I Ready to Retire? 4 Steps to Prepare for Retirement

3. Health coverage planning before Medicare

For many, retirement can start before you’re eligible for Medicare.

This gap can mean a few years of uncertainty about health coverage. Learning about your options before you retire can help you feel more secure later.

If you have a high-deductible health plan, you probably have a health savings account. You can use HSAs to pay for qualified medical and dental costs, and for some people, they’re a way to save for healthcare expenses in early retirement.

Some people use their HSA funds as they need them, while others let the balance grow for future needs. The best choice depends on your situation, but looking at your options before you retire can help you avoid last-minute decisions.

4. Life insurance review and approaching term expirations

If you have term life insurance, this is an age where you might be nearing the end of your level premium period. That does not necessarily mean coverage is no longer needed, but it does make this a natural time to review.

At this point, your questions may shift from short-term income protection to topics like:

• Ongoing income needs for a spouse or partner.
• Legacy or charitable goals.
• Final expenses.
• How coverage fits into overall retirement planning.

Some term policies let you convert your coverage to permanent insurance without extra medical checks, usually for a limited time. Looking at your options early can help you keep your flexibility, even if you don’t make changes right away.

5. Planning for potential chronic illness needs

As you get closer to retirement, planning often shifts from simply saving money to considering your future needs and goals.

Many people start to think more seriously about how they would handle a chronic illness later in life. This planning isn’t about expecting the worst, but about knowing what options you have if something does happen.

Some life insurance policies include living benefits, which pay a portion of your death benefit if you’re diagnosed with a serious illness, and some annuities offer features that can give you more income if your health changes. These options aren’t right for everyone, but they’re often part of bigger conversations about protecting your retirement savings and keeping your quality of life.

Having these conversations early can help you make decisions that align with your long-term goals, rather than making choices in a rush.

Why planning at 59½ is about preparation, not pressure

A common myth about age-based planning milestones is that they come with strict deadlines.

Turning 59½ isn’t about acting right away. It’s about learning your options while you still have flexibility.

If you see this age as a checkpoint instead of a deadline, you give yourself time to:

• Organize priorities.
• Identify questions.
• Coordinate decisions in a thoughtful sequence.
• Have conversations now to make things easier down the road.

Watch this podcast video to learn more about preparing for retirement as part of your financial plan.

Next steps

If you’re nearing or have already turned 59½, see this milestone as an opportunity to take a broader look at your plans. You don’t have to tackle everything at once. The aim is to get clear insights, not to finish everything right away.

A financial professional can help you figure out which of these topics matter for your situation and how they fit into your long-term goals.

Disclosures

In approved states, life insurance and annuities are issued by Ameritas Life Insurance Corp. In New York, life insurance and annuities are issued by Ameritas Life Insurance of New York. Policies and riders may vary and may not be available in all states. Optional riders may have limitations, restrictions and additional charges.

Representatives of Ameritas do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your specific situation.