The Pre-Retiree's 12-Point Financial Health Score: What to Lock Down Before You Retire

The decade before retirement is when everything changes. You're shifting from pure accumulation to transition planning. The decisions you make now - Social Security timing, Roth conversions, healthcare bridge strategy - have irreversible, decades-long consequences.

Claim Social Security at the wrong time? That decision follows you for life. Miss the Roth conversion window between retirement and RMDs? You've lost an opportunity that doesn't come back. Retire at 60 without a healthcare bridge strategy? Your ACA premiums could devastate the first years of retirement.

This is why we developed the Pre-Retiree's 12-Point Financial Health Score - a measurable framework that forces clarity on exactly where you stand.

Below is the pre-retirement version, designed for those ages 50-65 who are within striking distance of retirement. Score yourself honestly. The goal isn't reassurance - it's to identify gaps while you still have time to fix them.

How It Works

Twelve items. Four categories. Each item is worth one point - you either meet the benchmark or you don't. No partial credit. This forces clarity: you either have a documented Social Security claiming strategy or you don't. Your Roth conversion analysis is either current or it isn't.

Category A: Retirement Readiness

These three points measure whether you have enough and whether you've optimized your guaranteed income sources.

1. Retirement Feasibility Analysis

A Monte Carlo simulation or similar analysis confirming you have sufficient assets to fund your desired retirement lifestyle with an acceptable probability of success. The benchmark: your retirement projection shows 80% or higher probability of success (90% if you're conservative), updated within the past 12 months with current assumptions. Not a guess. Not a rule of thumb. Actual analysis. If your last projection is from 2019, you don't get the point.

2. Retirement Income Floor

Guaranteed income sources (Social Security, pensions, annuities) sufficient to cover essential expenses without relying on portfolio withdrawals. The benchmark: projected guaranteed income covers at least 70% of your essential retirement expenses. The goal is ensuring that market volatility doesn't threaten your ability to keep the lights on. If your Social Security plus pension covers your housing, food, insurance, and basic healthcare, you can weather a bad market without panic.

3. Social Security Optimization

A claiming strategy analyzed and documented to maximize lifetime household benefits, considering life expectancy, spousal benefits, and tax implications. The benchmark: Social Security optimization analysis completed showing optimal filing ages for both spouses, with break-even analysis documented. For many couples, the difference between the optimal strategy and what feels intuitive is $100,000 or more in lifetime benefits. If you're planning to "just claim at 65," you probably haven't done the math.

Category B: Tax Transition Strategy

These three points measure whether you're positioned to minimize taxes through the transition into retirement.

4. Roth Conversion Runway

A multi-year Roth conversion strategy to fill lower tax brackets before RMDs begin and Social Security is claimed. The benchmark: Roth conversion analysis completed with optimal annual conversion amounts identified based on current versus future tax brackets. The window between retirement and age 72-73 (when RMDs kick in) is often your lowest-tax years. Converting IRA money to Roth during this window at 22% is far better than being forced to take RMDs at 32% later. If you don't have a documented conversion strategy, you don't get the point.

5. Tax Bracket Management

Strategic management of income recognition to avoid bracket spikes and optimize lifetime tax efficiency. The benchmark: you understand your current and projected future marginal tax brackets, and the timing of income recognition (capital gains, IRA distributions, Roth conversions) is intentional rather than accidental. This requires multi-year tax planning, looking at this year, next year, and the decade ahead.

6. Catch-Up Contributions

Full utilization of enhanced contribution limits available to those 50 and older. The benchmark: contributing all available catch-up amounts to your 401(k) and IRA beyond the standard limits. If you're 55 and not maxing catch-up contributions while carrying a car payment, your priorities are misaligned.

Category C: Healthcare Bridge

These three points measure whether you've planned for healthcare costs, the wildcard that derails many retirement plans.

7. Pre-Medicare Health Insurance Strategy

A plan for health insurance coverage between retirement and Medicare eligibility at age 65. The benchmark: if retiring before 65, COBRA versus ACA exchange analysis completed, with premium costs and ACA subsidy cliff impact modeled. Healthcare costs can run $20,000-$30,000 annually for a couple in their early 60s. If you're planning to retire at 58 without understanding how you'll manage healthcare for seven years, you're not ready.

8. Medicare Planning

Understanding of Medicare enrollment requirements, Part D coverage, supplement versus Advantage decisions, and IRMAA impact. The benchmark: Medicare enrollment timeline understood, IRMAA surcharge impact calculated. IRMAA (Income-Related Monthly Adjustment Amount) is the surcharge high-income retirees pay for Medicare Parts B and D. It's based on your income from two years prior. A large Roth conversion at 63 can spike your Medicare premiums at 65. If you don't know what IRMAA is, you don't get this point.

9. Long-Term Care Strategy

A decision on how to address potential long-term care costs: self-insure, hybrid policy, traditional LTC insurance, or Medicaid planning. The benchmark: long-term care funding strategy documented. Long-term care can cost $8,000-$12,000 per month in most markets. That's $100,000+ per year. Whether you buy insurance, self-insure, or have another strategy, you need to have made a decision, not just hoped it won't happen to you.

Category D: Transition Readiness

These three points measure whether the operational elements of your transition are in place.

10. Retirement Budget Validation

A detailed retirement spending plan based on actual current spending, adjusted for retirement-specific changes. The benchmark: retirement budget created from actual expense tracking (not estimates), with adjustments for no payroll taxes, changed commuting and work expenses, increased travel and healthcare. Most people significantly underestimate retirement spending for the first five years. Travel, hobbies, home projects: you'll spend more than you think until you slow down.

11. Beneficiary and Titling Audit

All accounts have current beneficiaries that align with your estate plan, and account titling is optimized. The benchmark: beneficiary designations reviewed on all retirement accounts, life insurance, and transfer-on-death accounts within the past 12 months. The number of people we see with ex-spouses still named as beneficiaries is staggering. Your 401(k) beneficiary designation overrides your will. If you haven't checked recently, check now.

12. Sequence of Returns Protection

Portfolio positioned to reduce vulnerability to poor returns in the years immediately before and after retirement. The benchmark: bond tent or bucket strategy analyzed, with 2-3 years of expenses in stable assets (cash, short-term bonds) as retirement approaches. Sequence of returns risk is the danger that poor market returns early in retirement force you to sell assets at depressed prices, permanently impairing your portfolio. If you're retiring next year with 90% in stocks, you're gambling.

What Your Score Means

10-12 Points: Excellent. You're positioned for a confident transition into retirement. Focus on maintaining what you've built and optimizing the remaining gaps.

7-9 Points: Good, with opportunities. You're doing most things right, but some transition elements need attention. Prioritize your gaps now. You may not have another decade to fix them.

4-6 Points: Fair, with significant gaps. Multiple areas need work before retirement is advisable. A comprehensive review would help you understand what's missing and how to fix it.

0-3 Points: Critical. Major foundational elements are missing. If you're planning to retire soon, you need professional guidance immediately.

What to Do Next

This framework is how we evaluate every pre-retiree client at Life Strategy Partners through our pre-retiree planning process. We use it in our spring and fall reviews to track progress, identify emerging gaps, and ensure nothing falls through the cracks as retirement approaches.

If you scored lower than you expected, or if you want help building a comprehensive retirement transition strategy, we offer a complimentary consultation to discuss your situation. We're a fee-only fiduciary firm in Tucson, Arizona, which means we don't sell products and we're legally required to act in your best interest.

The pre-retirement window closes faster than you expect. The time to get this right is now.

Click Here to book a Quick Call. In 15 minutes, we'll see if we're the right fit for your situation.

Talk with you soon,

Life Strategy Partners

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This content is for educational purposes only and should not be considered personalized financial, tax, or legal advice. Your situation is unique. Consult with qualified professionals before making financial decisions. Life Strategy Partners is a registered investment advisor in Arizona.