Ready to Retire? First Plan Your Exit Strategy

After years of hard work, you've decided to call it quits and retire. But before waving goodbye to your colleagues, you'll want to plan an exit strategy. A smooth transition requires more than just figuring out how to survive without a steady paycheck. You'll also need to figure out how to cope with the emotional impact of forgoing a routine you've followed for most of your adult life. "One of the biggest challenges in retirement is really staying engaged," says Tom Nelson, chief operating officer of AARP in Washington. Here are some steps to pave the way to retirement:

Create a health-care fund. If you don't qualify for Medicare, set aside enough money to cover the cost of health insurance, even if your employer offers health plans to retirees, advises Drew Denning, vice president of the retiree-services division at Principal Financial Group Inc. "It's not a vested benefit like a company pension plan, meaning a company can retract that at any point in time," he says. Also, get a physical before your current health-insurance plan expires, says Mr. Denning. Since some providers deny coverage to high-risk individuals, you'll want to know if you fall into this category. If you do, consider staying on the job a little longer to "mitigate the significant risk of a huge health-insurance claim," he advises.

Develop a long-term budget. Determine how much money you'll need on a monthly basis for as long as 40 years from now, says Sandy Timmermann, director of Mature Market Institute, a research division at MetLife Inc. People "are focused on how much money we can accumulate, but not a great deal of attention gets paid to how you'll distribute that income for the rest of your life," she says.

Assist your employer. Recommend successors for your job and help the person who lands it get off to a strong start, suggests David Smith, managing director of talent and organization performance at Accenture Ltd., a global consulting company based in New York. Offer to have your successor shadow you for a few days and prepare a list of resources and key contacts.

Join your alumni network. Just like universities, many businesses now have alumni groups for employees. You'll have an easy way to get in touch with colleagues who've also left the company, says Mr. Smith. Staying connected can expose you to volunteer or consulting opportunities, too. Accenture alums, for example, began mentoring and training young employees about three years ago; some are even paid a small stipend for the help.

Secure government aid. It can take 90 days for eligible individuals to receive Social Security benefits or Medicare, says Mr. Denning. If you're 65 or older, or will be by the time you retire, sign up online at ssa.gov or call 800-772-1213 to receive benefits immediately after you stop working.

Plan ways to stay active. Without an itinerary to follow, retirement can quickly become dull and depressing, warns AARP's Mr. Nelson. "People get bored. People get isolated," he says. Do volunteer work, take up a hobby, enroll in classes or pursue a part-time job. "You really want to have a sense of meaning and purpose," he says.

Write to Sarah E. Needleman at sarah.needleman@wsj.com