Retirement & Longevity

Mastering the Last 5 Years Before Retirement

Mature woman looking over financial statements.

Retirement is right around the corner, and those final five years before you clock out for good are some of the most important in your financial journey. Whether you are dreaming of quiet mornings with coffee or globe-trotting adventures, now is the time to make sure your plans and finances are truly in sync. The good news is that it is never too late to make meaningful improvements. With the right focus, you can use these last few working years to step confidently into retirement.

Revisit Your Retirement Goals

First things first, take a moment to picture your ideal retirement. Will you be relaxing by the shore, traveling to new places, or spending more time with your grandkids? Your lifestyle goals directly influence your budget and savings needs. If your vision has changed since you first started saving, that is completely normal. Adjusting your plan now can have a meaningful impact later.

Boost Your Savings Where You Can

If you are age 50 or older, you may be eligible to take advantage of catch-up contributions, which allow you to save more in retirement accounts than younger workers. For 2026, this means contributing above the standard IRS limits to workplace plans such as a 401(k). These additional contributions can be especially powerful during your peak earning years.

This is also a good time to revisit how your investments are allocated. As retirement draws closer, many people choose to gradually shift toward a more conservative mix to help manage market volatility and protect what they have already built.

Create a Realistic Retirement Budget

Understanding your expected monthly expenses is key. Many experts suggest retirees may need about 70 to 80 percent of their pre-retirement income to maintain a similar lifestyle. Be sure to account for healthcare, travel, and everyday enjoyment. It is also wise to factor in inflation, which has historically averaged around 3 percent per year.

Plan Your Social Security Strategy

When you claim Social Security can significantly affect your monthly benefit. Although you can start as early as age 62, waiting until full retirement age or even age 70 can result in higher payments. For some people, delaying benefits makes sense, but the right choice depends on your health, income needs, and family considerations. A financial advisor can help evaluate your options.

Mind Your Healthcare and Insurance Needs

Medicare enrollment can be confusing, so it is important to understand your enrollment window. In addition to Medicare, you may want to explore supplemental coverage or long-term care insurance. Healthcare remains one of the largest retirement expenses, averaging about $7,000 per year per person, so planning ahead can help prevent unwelcome surprises.

Tackle Debt and Major Expenses

If possible, aim to reduce high-interest debt before retiring. Carrying balances into retirement can strain your cash flow and add stress. You may also want to plan ahead for major expenses such as home repairs or a vehicle purchase. Addressing these costs early can provide greater financial flexibility later.

Get Your Legal Documents in Order

Finally, make sure your wills, trusts, and powers of attorney are up to date. These documents help ensure your wishes are followed and can ease the burden on your loved ones. If it’s been a while since you reviewed them, now’s the perfect time.

The final five years before retirement don’t have to feel overwhelming. With thoughtful planning, a bit of saving, and informed decisions, you can create a retirement that reflects the life you envision. Here’s to a confident, joyful transition into your next chapter!

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