The years immediately preceding retirement, and the first couple of years of actual retirement, are a critical time for individuals. After carefully planning and diligently saving for retirement most of their lives, individuals must make some important decisions during this time.

“These decisions could have a big impact on an individual’s or couple’s retirement finances for years to come,” says David Lerner Associates Executive Vice President Martin Walcoe. Some of these decisions fall into the following areas:

1. Early IRA withdrawals and 401(k) distributions - Withdrawals from IRAs before age 59 1/2 are generally subject to a 10 percent early withdrawal penalty. However, this penalty may be avoided if substantially equal periodic payments are taken from the IRA based on life expectancy for at least five years, or until age 59 1/2, whichever is longer.

The same early withdrawal penalty generally applies to withdrawals from 401(k) plans that are made before age 59 1/2, Walcoe notes. However, individuals who are at least 55 years of age when leaving a job can begin to take penalty-free distributions from a 401(k), although federal and state income taxes will still be due upon withdrawal.

2. Minimum IRA distributions - Minimum distributions must be made from Individual Retirement Accounts (IRAs) by April 1 of the year after individuals turn 70 1/2 years old. Withdrawals must begin by December 31 of this year and continue each year thereafter. The penalty for failing to take minimum IRA distributions is 50 percent of the amount that should have been withdrawn.

3. Timing of receiving Social Security benefits - Currently, you may elect to begin receiving Social Security benefits as early as age 62. However, you will receive a larger payment each month if you wait until your full retirement age of 67 (if you were born after 1959) and an even larger monthly payment still if you wait until age 70 to begin receiving benefits.

“Each individual’s unique situation will dictate when he or she should elect to begin receiving Social Security benefits,” says Walcoe. If you’re married, however, keep in mind that if you decide to wait until age 70 to receive benefits, you can still file for spousal Social Security benefits at age 66. If your spouse is collecting a Social Security benefit, this could boost your household income by half of this amount.

4. Enrolling in Medicare Part B - Currently, Americans are eligible to enroll in Medicare at age 65. Once eligible, though, you must enroll in Medicare Part B (which covers outpatient services and doctor’s appointments) within three months of your 65th birthday. Otherwise, a late-enrollment penalty may apply that would boost the premium amount by 10 percent for each year that’s delayed.

Note that this penalty is waived for individuals who maintain health insurance through an employer (or a spouse’s employer). However, it is retroactive if enrollment is not completed within the required time frame after this coverage terminates.

Given the potential long-term financial impact of these and other decisions, Walcoe says it may be advisable to seek professional assistance from a financial planner and/or tax expert in making them. “Making the wrong decisions during this time could cost individuals and couples dearly for the rest of their lives.”