October 26, 2026 - Maybe you’ve already picked your retirement date. Or maybe you’re still deciding, quietly doing the research before you tell anyone at work.
Either way, if 2027 is your year, a few decisions are worth making before December 31, 2026. Once the calendar turns, some opportunities will be gone.
Your last working year may be one of your highest-income years. Salary, bonuses, deferred compensation, stock awards, or the sale of a business can create a substantial tax bill. The years that follow may offer very different opportunities, and a few decisions made now can change how the next ten look.
Some decisions have a December 31 deadline. Others need attention well before your last day at work. Here’s what should be considered.
Question To Ask Before December 31
Will your tax bracket be lower next year? If you're currently in a high federal income tax bracket, shifting income or deductible expenses between 2026 and 2027 could produce substantial tax savings for you. Consider the timing of bonuses, deferred compensation, and other income where you still have flexibility.
Should you accelerate your charitable giving? If you give to charity, explore making several years of gifts in 2026, if your tax rate is higher this year. A donor-advised fund allows you to take an available deduction now while distributing those gifts to charities over many years. Donating appreciated securities may offer additional tax advantages, subject to applicable deduction limits.
Are there investment gains or losses to address? Review your investment gains and losses. Recognizing a capital gain in 2027 rather than 2026, or realizing an investment loss this year, could change your overall tax bill. These decisions should also be coordinated with charitable giving.
Have you maximized your retirement contributions? Review final-year contributions to your 401(k), 403(b), or 457 plan, including catch-up contributions. Your last few paychecks may be your final opportunity to contribute through your employer.
Are you selling a business? The year you sell a business may be the highest-tax year of your life. The timing and structure of the sale, along with charitable gifts and other tax strategies, deserve careful consideration before the transaction is completed. Some options may disappear once agreements are signed.
Things to Consider Before Retirement
These decisions may not have a December 31 deadline, but waiting until your retirement date can limit your choices.
What employer benefits require a decision? Pension elections, survivor benefits, retiree medical coverage, deferred compensation, and stock awards may require decisions before leaving employment. Some choices, particularly pension elections, are difficult or impossible to reverse.
Should you consolidate retirement accounts? Moving a 401(k) or 403(b) into an IRA can simplify investments and account management. However, certain investment guarantees, tax advantages, and creditor protections may be lost in a rollover. These decisions deserve more attention than they often receive, as we discuss in our separate article on 401(k) and 403(b) rollovers.
What will your tax picture look like in the future? There’s often a window after retirement, before Social Security, pensions, or required minimum distributions begin, when taxable income is unusually low. These years can be particularly valuable for Roth conversions. However, recognizing too much income can also trigger higher Medicare premiums through IRMAA, generally based on income from two years earlier. Even which accounts you draw upon, and when, can be an important tax decision.
How These Decisions Work Together
We once worked with a family facing a substantial deferred-compensation payout during their final working year. They were also longtime, generous charitable givers.
We coordinated a large contribution to a donor-advised fund in the same year as the payout, substantially offsetting the income tax while setting aside enough money to support the family's normal charitable giving for the rest of their lives.
In the lower-income years that followed, we used that window for carefully timed Roth conversions, taking advantage of favorable tax brackets without crossing into the next Medicare premium bracket (IRMAA).
The family benefited from planning across several tax years rather than making each decision independently.
Before You Turn the Page on 2026
Retirement is an opportunity to reconsider how your investments, taxes, employer benefits, charitable giving, and estate plans fit together. A decision that makes sense during your final working year may be entirely different from the right decision after retirement. And some opportunities, once missed, cannot be recovered.
If you're deciding whether to handle these questions yourself or seek professional guidance, our article Do I Need a Financial Planner? may help you decide what your next step should be.
If you would like to get a second opinion on your retirement strategy, please reach out. Email me at bryan@timberchase.net.