What You Need to Do 5 Years Out From Your Retirement
As retirement approaches, it’s natural to feel a mix of excitement and unease. Stepping away from a lifetime of work into a new chapter raises plenty of questions—and a fair share of “what-ifs.” In fact, about half of Americans worry they might outlive their savings. So, how do you navigate the transition thoughtfully and confidently?
The answer lies in planning—and doing it with intention. The five years leading up to retirement are a critical window for making smart decisions that align with your goals. Here’s a year-by-year guide to help you prepare, adjust, and move into retirement feeling ready for what’s ahead.
Five Years Out: Time to Get Strategic
Five years might sound like a lot of time, but this phase is where proactive steps can make a meaningful difference. This is the moment to reduce your exposure to common retirement pitfalls, like relying too heavily on unpredictable markets or misjudging your future expenses. Laying the groundwork now gives you more control later.
Cash Is Still King: Build a Buffer
One of the smartest moves you can make? Building a solid cash reserve. Once you retire, regular paychecks stop, and your income will likely come from a mix of investment withdrawals and savings. That’s when market dips can sting.
Having two to three years’ worth of expenses set aside in accessible funds gives you breathing room during downturns. Think of it as your personal shock absorber—especially useful when the markets behave unpredictably (remember the market reactions during past trade tariff shifts?).
Max Out Your Savings: Don’t Skip the Catch-Up
This is your time to turbocharge your savings. If you’re over 50, you can take advantage of “catch-up” contributions to retirement accounts like 401(k)s and IRAs. In 2025, the total contribution limit for those over 50 is up to $31,000 for 401(k)s.
And there’s a bonus for those between 60 and 63: a temporary “super catch-up” of 150% of the standard limit. Adjusting your withholdings to hit these targets could add valuable flexibility in the years ahead.
Get Smart with Tax Planning: Roth Conversions & More
This is also the time to think long-term about taxes. Should you convert some traditional IRA assets to a Roth? Would tapping taxable accounts now reduce future required minimum distributions (RMDs)? Making these moves early may help manage future tax burdens and avoid “bracket creep.”
While no two situations are alike, evaluating your options now gives you more choices down the road.
Lifestyle Vision: It’s Not All About the Numbers
Yes, the spreadsheets matter—but retirement is about more than finances. What do you actually want to do? Will you stay in your current home or relocate? Pick up a new hobby, travel, volunteer, or start a part-time business?
We’ve seen people light up when they finally explore long-postponed passions—photography, writing, even launching a small venture. The earlier you think about this, the easier it is to shape your next chapter intentionally.
Three Years Out: Fine-Tune Your Investments
With retirement on the horizon, it’s a good time to revisit your investment mix. Does your asset allocation reflect your comfort with risk and your need for income? Inflation protection and growth remain important—but so does stability.
You want a balance that supports your short-term spending and long-term goals. A diversified portfolio can help you ride out the bumps while staying on track.
Two Years to Go: Build Your Cash Flow Strategy
Start testing your plan in real-time. Should you claim Social Security now or later? What’s the best way to coordinate spousal benefits? Decisions here can have ripple effects for years to come.
We’ve seen how aligning benefits with personal timelines—not just default ages—can lead to more flexibility and better outcomes.
One Year Out: Try Before You Buy
Think of this year as your dress rehearsal. Can you live on your projected retirement budget? Set up a dedicated account for monthly “retirement income” and use it as your spending base.
This exercise often reveals hidden expenses or areas where expectations and reality don’t quite match. Adjusting now gives you time to make thoughtful changes before the big day.
Final Three Months: Dot the I’s and Cross the T’s
You’re almost there. These last few months are all about execution: paperwork, income sources, insurance, healthcare planning, and estate documents. With the logistics locked down, you can shift your focus to the personal side—what you want life to feel like in retirement.
Whether you’re dreaming of quiet mornings or planning a cross-country road trip, this is your moment to step into the lifestyle you’ve been preparing for.
The Takeaway: Retirement, On Your Terms
Engage with these strategies and consider discussing your personalized plan with professionals who can tailor strategies to your unique circumstances. Begin the dialogue, solidify your foundation, and step into a well-prepared future, embracing the promises of a retirement lived fully on your terms.
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