For many people, retirement planning feels like a long, steady climb. Then, somewhere around five years out, the pace changes. Decisions that once felt far away start arriving on a schedule, and many of them are difficult to reverse once made.
We call this stretch the five-year retirement window. It is often the period when thoughtful planning can make the biggest difference, because there is still time to adjust course. Here are some of the decisions worth putting on your radar.
1. Define what retirement actually looks like
Before numbers, there is a picture. Where will you live? Will you work part-time, consult, volunteer or travel? Will you help children or grandchildren, or support an aging parent?
These answers shape everything that follows. A retirement that includes a second home and frequent travel calls for a different plan than one centered on staying close to family. Putting a realistic estimate on your expected spending, including the early, more active years, is one of the most useful exercises you can do.
2. Take stock of your savings and your remaining runway
Five years out, you likely have a clearer view of what you have saved and how much more you can add. This can be a good time to review:
- Whether you are taking full advantage of workplace retirement plans, including catch-up contributions available to savers age 50 and older
- How your accounts are divided among tax-deferred, Roth and taxable accounts, since each is treated differently when you withdraw
- Whether your investment mix still fits a shorter time horizon and the income you will soon need
3. Think carefully about Social Security timing
You can generally claim Social Security benefits as early as age 62 or as late as age 70. Claiming earlier typically means a permanently reduced monthly benefit, while waiting past your full retirement age can increase it.
The right timing depends on your health, your other income sources, your marital status and how long you expect to need income. For married couples, the decision can also affect survivor benefits. It is a decision worth modeling, not guessing.
4. Understand your pension and employer benefit choices
If you have a pension, you may face a choice between a lump sum and a lifetime payment, and among different survivor options. Many of these elections are permanent.
It also helps to review what happens to other workplace benefits when you leave, including group life insurance, deferred compensation, stock options and any retiree health coverage.
5. Plan for health care before Medicare
Medicare eligibility generally begins at age 65. If you plan to retire earlier, you will need a way to bridge coverage, whether through a spouse's plan, COBRA, retiree coverage or the individual marketplace. Health care costs can be one of the larger and less predictable expenses in retirement, so it is worth building them into your plan early.
6. Consider how taxes will change
Retirement often changes your tax picture. The order in which you draw from different accounts, the timing of Roth conversions, and the start of required minimum distributions can all affect how much you keep. Income in certain years can also affect Medicare premiums later on.
These are areas to explore with your tax professional as part of a coordinated plan.
7. Revisit protection and legacy plans
As retirement approaches, your insurance needs may shift. Some coverage may no longer be necessary, while other risks, such as the cost of long-term care, may become more relevant. It is also a natural time to review beneficiary designations, wills and other estate documents with your attorney so they reflect your current wishes.
Why the window matters
Each of these decisions affects the others. A choice about Social Security changes how much you need from your portfolio. A pension election affects your spouse's security. A withdrawal strategy affects your taxes and your Medicare premiums.
Starting the conversation five years out gives you room to test options, make adjustments and enter retirement with a plan rather than a series of last-minute decisions.