5 Things to Plan 5 Years Before Retirement

5 Things to Plan 5 Years Before Retirement

5 Things to Plan 5 Years Before Retirement

Retirement might feel like it’s just around the corner—but five years is a perfect window to fine-tune your strategy. Here are five essential areas to focus on now to help ensure a secure and fulfilling retirement.

1. Get Clear on Your Retirement Budget

Estimate your future living expenses, including housing, healthcare, travel, and hobbies. Then compare that to expected income sources—Social Security, pensions, investment withdrawals. Knowing your monthly need helps you plan realistically and avoid surprises.1

 

2. Optimize Social Security Timing

Decide when to start Social Security. Taking it early (as young as 62) reduces your monthly benefit, while delaying to age 70 maximizes it. The right choice depends on your health, longevity outlook, and financial needs.2

 

3. Assess Healthcare Costs

If you retire before 65, you’ll need to bridge the gap before Medicare kicks in. Research ACA marketplace options and income limits for subsidies. Factor in premiums, out-of-pocket costs, and long-term care planning.3

4. Refine Your Investment Strategy

Five years out is the time to start reducing risk. Shift from aggressive growth to a more balanced portfolio focused on income and capital preservation. Also, ensure you have enough liquid assets to cover a few years of living expenses.4

 

5. Plan for Withdrawals and Taxes

Understand how you’ll withdraw funds from IRAs, 401(k)s, Roth accounts, and taxable investments. Map out a tax-efficient sequence to minimize taxes and avoid Required Minimum Distribution (RMD) shocks in your 70s.5

 

Final Thought

Retirement isn’t a finish line—it’s a transition. With five years to go, you still have time to make decisions that will shape the quality of your next chapter.

References

  1. https://www.tiaa.org/public/pdf/r/retirement_expense-income_worksheets.pdf
  2. https://www.ssa.gov/benefits/retirement/planner/agereduction.html
  3. https://www.anthem.com/individual-and-family/insurance-basics/health-insurance/early-retirement-health-insurance
  4. https://www.investopedia.com/fa-one-thing-retiring-in-2025-11723573
  5. https://www.fidelity.com/viewpoints/retirement/tax-savvy-withdrawals

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