Pre-Retirement Checklist: Tips for How to Prepare for Retirement

Pre-Retirement Checklist What is your current retirement outlook? If you’re 10 years or less from retirement, does getting everything in order seem like too much to process? Do you know where to even start?

According to a 2018 survey by the Indexed Annuity Leadership Council (IALC), 79 percent of workers surveyed admitted to expressing worry about their retirement.1

The survey also found workers who feel unprepared for retirement lack information about retirement planning, with approximately half feeling only a little or not at all informed.1

When it comes to retirement, here are some important ages to remember:

  • 50: The age when you can defer paying income tax on more of your qualified retirement plan contributions (“catch-up contributions”)2
  • 59 ½: The age when you can begin withdrawing funds from qualified plans, such as 401(k)s and IRAs, and annuity contracts without incurring a 10 percent federal penalty (unless an exception applies for early distributions)3
  • 62: Earliest age when you can start receiving Social Security retirement benefits4
  • 70 ½: The age when you must begin taking annual distributions from your qualified retirement plans, except Roth IRAs 5

Whether you’re 10, 5 or 1 year away from retirement, here are some important tips that may help put you at ease with your planning.

10 Years from Retirement

The IALC survey reported workers regretted not saving enough when it came to retirement planning. In fact, 40 percent of workers surveyed claimed their biggest mistake in retirement planning was not saving earlier.1

Have you started to think about your retirement date, and if you can afford to retire within the next decade? If you don’t think you can afford to retire in the next decade, you might need to evaluate your retirement income sources, such as your company’s 401 (k) plan, annuities, or other financial investments.

During this pre-retirement period, you should consider evaluating all your potential income sources for retirement. A retirement planning tool that can help is the Social Security Administration’s website.

The Social Security Administration allows you to set up a free account where you can receive personalized estimates of future benefits based on your earnings, get your latest Social Security statements and review your earnings history.6

Five Years from Retirement

One third of workers think they will spend more during retirement on daily expenses and activities, as compared to their current expenses, while two-thirds of workers believe they will actually spend less, according to the IALC survey.1

What kind of lifestyle do you want in your retirement, and are you financially prepared to pay for it?  According to a 2014 survey conducted by the Bureau of Labor Statistics, total yearly expenses for those surveyed averaged $49,279 for households with people age 55 and older.7

It’s important to take inventory of your assets and annual expenses so you can identify any gaps between your income and expenses.

The Bureau of Labor Statistics also stated survey participants reported housing is the greatest expense for households with a person age 55 or older.7 Think about where you want to live and what type of house, condo or apartment would be best for you in your golden years, and remember to calculate that into your expenses.

Health care is another major expense during retirement. The Lifetime Medical Spending of Retirees report stated people incur an average of $122,000 in medical expenses, including Medicaid payments, between the age of 70 and throughout their remaining years.8

Next on the list is to make sure you have a plan for health insurance, especially if you retire before age 65, which is when Medicare coverage can begin.9

Five years out from retirement is a good time to review and, if necessary, update your estate plan. Have you named the proper beneficiaries or pay-on-death designees on all of your accounts and policies?

A survey from, a company that specializes in senior care, showed only 42 percent of U.S. adults surveyed have prepared estate planning documents, including a will or living trust. In contrast, 81 percent of adults surveyed, who were 72 or older, reported having either a will or living trust.10

Another important estate-planning document is a power of attorney (POA). A POA allows you to designate someone you trust to make important decisions for you in case you are not able to do so in the future. A financial POA allows you to designate someone to make financial decisions for you. A medical POA allows you to designate someone to make medical decisions for you.

The survey also showed 83 percent of Americans surveyed over the age of 72 have executed a health care power of attorney.10

It’s important to make sure all necessary legal documents concerning your estate are up to date. Keep in mind, estate-planning documents are important legal documents, which should be prepared by a licensed attorney.

One year from Retirement

At one year out, retirement might seem right around the corner. You’ve spent the last decade making sure your finances and savings are in order; now it’s time to make sure you’re ready for a lifestyle change. That might even mean continuing to work in some type of professional capacity. Nearly 25 percent of Americans age 65 and older without a disability are participating in the current labor force.11

Leaving one type of profession might open the door to another in your post-retirement years. You can also make the choice to stay involved in your previous workplace, just in a different role. A retired teacher might become a substitute for the local school district, and a business executive might look into becoming a management consultant.

This is a point where you can choose how you want to earn additional income in retirement. Another important decision to make is how to spend your free time.

Social networks are often built around jobs and professions. It’s important to invest time and resources into physical and mental health and building up a new social network during retirement. This could include getting a gym membership and attending group exercise classes, joining a senior center or finding other social activities outside of work.

In preparing to retire, you have to take all of your financial, health and lifestyle decisions into account. The earlier you start making decisions about life in your golden years, the better off you may be.

While it may seem like a lot all at once, a checklist can help keep your tasks in order, especially as your retirement date gets closer. Download our pre-retirement checklistopens a pdf fileOpens a New Window. so you can start preparing for your future, whether retirement is a decade or just months away.



  1. Footnote1Indexed Annuity Leadership Council “Survey of America’s Workforce: A Study of Retirement Readiness by Industry and Occupation” 2018
  2. Footnote2 I.R.C. § 219(b)(5)(B)(i) (2018).
  3. Footnote3I.R.C §72(t)(2)(A)(i) (2015).
  4. Footnote4Social Security Administration “Benefits Planner: Retirement”
  5. Footnote5I.R.C §401(a)(9)(C)(i) (2018).
  6. Footnote6Social Security Administration “Social Security”
  7. Footnote7United States Department of Labor Bureau of Labor Statistics “A closer look at spending patterns of older Americans” 2016
  8. Footnote8National Bureau of Economic Research “The Lifetime Medical Spending of Retirees” 2018
  9. “Getting started with Medicare”
  10. “More Than Half of American Adults Don’t Have a Will, 2017 Survey Shows” 2017
  11. Footnote11United States Department of Labor Bureau of Labor Statistics “Databases, Tables and Calculators by Subject

The content is provided for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation, contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact your state insurance department to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.
American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Please consult a qualified professional.

Benefits of Fixed Index Annuities

In a relay race, the strength of the team outweighs the abilities of a single athlete. For each leg of the race, a runner plies their abilities to benefit the next and position them for success. By leveraging a combination of skills, the group outperforms the individual. As a result, the world record for the 4×100-meter sprint relay is more than six seconds faster than the individual 400-meter dash.

A sound retirement income plan is like a relay race: benefits working in concert help position you for success through each leg of the run up to and past the retirement finish line. As part of a comprehensive strategy, fixed index annuities offer a combination of benefits that can help build, secure and sustain retirement income.

Below, we highlight six key fixed index annuity benefits that help fund each leg of the run up to and through retirement.

1. Principal protection is a fixed index annuity benefit, helping secure long-term stability.

A fixed index annuityOpens a New Window. is an insurance product designed to ensure retirement income.  Funds contributed to a fixed index annuity can never be lost due to market volatility.

This can be an especially vital benefit for many Americans who are facing their golden years with trepidation about  their savings. A 2018 Index Annuity Leadership Council (IALC) study found 71 percent of today’s older workforce’s top concern in retirement is principal protection.1As part of a comprehensive strategy, a fixed index annuity can go a long way in protecting those hard-earned dollars.

2. Tax deferred growth potential from a fixed index annuity is a great opportunity to help build up a revenue source.

Along with protection from index decreases, most fixed index annuities also help shield money from annual taxation on interest, as long as funds remain in the annuity. Instead, funds held in an annuity are generally taxed as ordinary income when withdrawn. This allows a nest egg to grow tax-deferred with compounding interest through the accumulation phase, further shoring up resources for when you choose to take an income.

Because a fixed index annuity offers the opportunity to earn interest on principal, on interest earned and taxes deferred, it offers a path to jump start retirement assets that may not be available with a non-tax deferred account. That can be a welcome hand up for the many Americans; according to data released by the IALC in 2017, 90 percent of Americans lack confidence in their retirement savingsOpens a New Window..2

3. Growth opportunities are a key appeal for those looking for increased asset potential without risk exposure.

In addition to protection of principal, any interest credited to a fixed index annuity is also protected. As an insurance product, a fixed index annuity is not directly invested in the market. Rather, interest is credited based on the performance of an external index (e.g., S&P 500®). Contract owners typically have the flexibility to choose among a variety of index-linked crediting strategies, many of which include a cap or participation rate. Once interest is credited, it can never be decreased due to market volatility.

4. Liquidity is an important benefit of the fixed index annuity’s long-term design.

Fixed index annuities offer a variety of liquidity options to allow the owner to access funds in an annuity. Many fixed index annuities allow the owner to withdraw up to 10 percent.*Many annuities also offer increased or full access to the contract value for qualified care needs.**

5. Guaranteed income with a fixed index annuity provides long-term income stability.

Following the accumulation period, income payments can begin. These payments can be taken as a lump-sum, fixed installments over a specified period (e.g. 20 years)  or as guaranteed payments for the rest of the annuitant’s life.

A basic fixed index annuity typically does not have any associated mortality and expense fees, management fees or administrative fees, which are typically associated with variable annuities. Fixed index annuities are typically intended to be long-term investments, so there may be fees for withdrawing more than the allotted penalty-free amount.

Many contract owners elect to add optional riders to their fixed index annuity, such as a lifetime income benefit rider. A lifetime income benefit rider provides increased payout flexibility by allowing the owner to receive lifetime income payments during the annuity’s accumulation phase. Some riders come with no fee, and others come with a small annual fee.

6. Take care of loved ones by ensuring fixed index annuity funds are paid directly to a named beneficiary.

A fixed index annuity allows contract owners the opportunity to designate a beneficiary to receive a death benefit upon the owner’s death, instead of requiring funds be paid to the owner’s estate. This helps loved ones avoid the expense and time of probate. If a contract owner dies during the accumulation or distribution phase, the annuity guarantees direct payment to the named beneficiary. Depending on the contract, these payments may be in the form of a lump-sum, series of payments, or lifetime payments.

Reliable retirement benefits

By design, fixed index annuities aim to protect and help grow money over time in order to deliver a stream of reliable income payments. A product with a simple and transparent design can be an integral part of a retirement income strategy. Over the next 10 years, an entire baby boomer generationOpens a New Window. will reach retirement age. For those looking for safe money options, a fixed index annuity may be the right product at the right time to help fund retirement from start to finish.



1Indexed Annuity Leadership Council, “The State of America’s Workforce: The Reality of Retirement” 2018
2Index Annuity Leadership Council, “America is Incredibly Savings Insecure” 2017
*The annual free withdrawal amount available differs by insurance company and annuity product. Withdrawals made before age 59 1/2 may be subject to a 10% federal tax penalty. of the annuity’s value each year without a penalty, during the accumulation phase.
**Waiver of surrender charge features vary by insurance company and annuity product; some features may require the owner to pay a fee.

The content provided is for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact your state insurance department to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.
Guarantees are based on the financial strength and claims paying ability of American Equity and are not guaranteed by any bank or insured by the FDIC.
American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Please consult a qualified professional.