Getting Ready to Retire? Check These Things First Before you crash down your boss' door with your retirement announcement, consider doing your homework first. You don't want to get overeager without d...

Have you decided you're mentally ready to retire?

How about financially? You might already know someone who decides they want to retire, tells all their friends, family and neighbors, then looks into the "financial stuff."

A financial advisor friend I know once said people do it all the time — they get all excited about it and then come talk to him. He remembers one individual who vowed to "make it work" to save face because she'd already announced her retirement to her boss.

After all, she could hardly say, "Uh, actually, I take it back. I don't want to retire." She couldn't wiggle out of it.

He says she quietly opted for a part-time job halfway through her first year of retirement.

Here's what you need to do so you don't strap yourself financially. Let's take a look.

Take a Look at Your Current Financial Situation

Meet with a financial advisor or take an objective look at your own financial situation. What kinds of assets can you bring to the table?

• Individual retirement accounts (IRAs)
• Retirement plans (401(k), 403(b) or another type of retirement plan offered by your employer)
• Personal savings (CDs, bank and money market accounts)
• Investments (stocks, bonds, mutual funds, real estate)
• Money in your emergency savings account

What kinds of debts do you carry? For example, do you have any of the following?

• Credit card debt
• Medical debt
• Student loans
• Personal loans
• Auto loans
• Mortgage debt

What types of monthly expenses do you incur?

• Homeowners or renters insurance
• Property taxes (if not included in your mortgage payment)
• Auto insurance
• Auto expenses
• Health insurance
• Medical expenses
• Life insurance
• Electricity and natural gas bills
• Water bills
• Sanitation/garbage bills
• Groceries
• Public transportation
• Internet
• Cellphone or landline costs

Make a list of all the expenses you can think of. Take a look at your credit card bills, statements and more to determine your everyday and monthly expenses.

Figure Out How Much You Need to Live on in Retirement

Financial experts always recommend figuring out how much you need to live on in retirement early on in your working years, and now it's time to put that figure to the test.

Can you live on 70% or 80% of your preretirement income? Do you need more or can you squeak by on less?

Let's say that right now, you make $100,000 per year. Based on the 80% principle, you can expect to need about $80,000 in annual income after you retire, or $6,666 per month.

Does that ring true for you? Based on your tally of all your expenses, debts and everything else you owe from your current income, can you make that work on a monthly basis?

How about $5,833 per month, which would be 70% of your income? Is that possible?

You'll only know if you crunch the living daylights out of those numbers.

Eliminate Your Debt

Seriously consider eliminating all debt at this point. If you've got two years left on your mortgage payments, pay off your mortgage. If you still have credit card debt hanging around, eradicate it. You want to do as much as you can to get rid of any debt because without a paycheck coming in, that means that it'll be more of a stretch for you to make debt payments.

You may want to consider the debt snowball method (by paying the debt with the smallest balance first) or the debt avalanche method (by paying debts with the highest interest rates first). For example, the debt avalanche method would encourage you to pay off the highest interest rates first — usually credit card debt, followed by personal loans and auto loans.

On the other hand, for the debt snowball method, you might have two debts: a $2,000 personal loan at 8% interest rate, $5,000 in credit card debt at 17% interest rate. Debt snowball says that you'd pay off the $2,000 personal loan first because it's the smaller loan amount.

Get Your Health Insurance Figured Out

Medicare will cover you if you retire at age 65 or older. However, know that it's not free, and learn the costs on Medicare's site. You may also need a supplemental insurance plan for things that aren't covered.

You may wonder how to finagle health insurance if you retire before age 65. You may be able to tap into the Consolidated Omnibus Budget Reconciliation Act (COBRA), which requires certain employers to allow you to stay on your health insurance under your company's group health insurance plan for a period of time. It could mean the difference between retiring a few months before you turn 65.

Otherwise, you'll have to get health insurance on your own. Know what you'll pay for premiums, deductibles, copays and other expenses.

Get a Tutorial on Withdrawing Funds

You may have already heard about the 4% rule — that you can withdraw about 4% of your investments during your first year of retirement. You may need to withdraw more than that to keep up with inflation for every year after that.

Furthermore, know the ages in which you can withdraw from your retirement accounts without paying penalties.

You are generally allowed to take penalty-free distributions starting at age 59½. However, by April 1 of the year after you reach age 72, you must take required minimum distributions (RMDs) from your IRAs. Check with your plan administrator for details or reach out to your financial advisor for more information.

Get Your Ducks in a Row Before You Make Your Big Announcement

Rather than announcing in your company meeting that your retirement is imminent, you may want to do some digging first.

Talk to the experts who manage your portfolio. You want to know every single detail about your withdrawals, taxes you'll pay (remember, if you have an IRA or 401(k), you'll pay taxes!) and more.

You want to do everything you can to streamline your income when you retire, pay off your debt in advance and prepare. Following these steps can save you time down the road.