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Ready to Retire? What to Do Before You Tell Your Boss

Peter Dazeley | Photographer's Choice | Getty Images

Vacation might be your last concern as you get set to tell your boss you're retiring. After all, you have the rest of your life to relax.

But vacation days are just one reason Anna Behnam, a private wealth planner with Ameriprise Financial Services, says you should start preparing for your departure at least six months before you tell anyone you are leaving—beyond making sure you have sufficient funds to meet your retirement goals.

"If you have 20 days of paid vacation coming to you," says Behnam, "you may lose them if you haven't left yourself time to go away. That's why I ask my clients to think through their retirement announcement in advance."

Not all of that preparation, unfortunately, will be as pleasurable as taking your last paid vacation. As with most retirement planning, Behnam's pre-retirement checklist includes plenty of paperwork, but by attending to details that may be harder to address once you've left the building, you'll be sure you're getting your money's worth out of your employer even as you leave.

(Read more: CNBC Poll: Do You Wish You'd Prepared Better for Retirement?)


The place to start is your company computer. Printing out or downloading compensation statements and benefits information, and pension balances may be a lot easier while you still have an official logon.

Once you have them in front of you, read through these documents thoroughly. Your compensation statements tell you how much you have been spending for health insurance and how much tax was withheld — both are numbers that may help you make decisions later.

Your pay stub may even tell you things you didn't know. "A lot of people don't ever read their compensation statements," says Behnam, citing one client who didn't realize she had thousands of dollars in deferred compensation until she was walking out the door.

Peruse a benefits manual to find out what your company offers retired employees who have enjoyed health and life insurance through the company. Determine whether you can transfer your health insurance to an individual policy. You won't necessarily blow your cover if you call Human Resources or drop by their desk to ask how much it will cost to do so. The same goes for life insurance coverage and long-term care, which many firms extend to former employees, often at a lower cost than what you'll find on the open market.

While you're talking to HR, ask about your pension plan. Your pension, if you have one, can be qualified or non-qualified, meaning your payments will either be non-taxable or taxable, respectively. You may also be able to take it as a lump-sum instead of in monthly payments, roll it into another fund you like better, or annuitize it. Knowing your options in advance will give you time to work through the tax implications of each.

Don't forget the details either, says Behnam.

Before you leave, she said, "Make sure you know the name of the plan, and who the manager is and how to contact them." Often, your company's HR office no longer handles your account once it is activated. Even simple chores like updating your address or marital status are more easily made with the folks down the hall than at the other end of a customer-service line.

Conduct a similar investigation about your stock options, if you have any. Policies about options vary widely from firm to firm. Some ask you to exercise your options as you leave; others allow you to retain them. Inquire about the vesting schedule, and find out from the responsible party or your accountant what taxes you'll need to pay when.

Human resources may not always have all the answers you need. Many companies appoint a transition team, often stocked with senior officers, to walk you through the exit process, and serve as a contact after you depart. It may be harder to disguise your intentions once you start asking questions of your colleagues, instead of making discreet inquiries of HR. Only you can judge when is the right time to step up your planning to this level.

You may not feel you need to keep your decision quiet at all. As you approach 65 (or older, as is often the case these days) -- and as co-workers notice an extra bounce in your step -- your retirement may become the office's worst-kept secret anyway. But Behnam points out that your company likely has a policy that requires you to give them a notice before you walk, and she recommends sticking to that deadline.

If you signal your departure too soon, it's possible the firm will find your replacement and push you out before you are ready. You may also be passed over for interesting projects or even pay raises (with attendant bump-ups in benefits) that you would have otherwise been awarded as a continuing employee.

Once you do make the big announcement, behave as you would if you were leaving any other job.

"A lot of my clients do go back to work," said Behnam, and you'll want good relationships with your former colleagues as well as your own clients or customers if you do. Get three letters of recommendation from your superiors, preferably during that warm and fuzzy time when everyone is still congratulating you on your decision.

By making that decision a process, you'll be ready for those goodbye hugs. By the time you are walking into your boss's office, you'll be confident—not only that your finances are place, but that you are mentally and emotionally prepared to walk away.

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Retirement