Five Things You Should Be Doing If Retirement Is 1–5 Years Away

 

After sitting with hundreds of retirees over my career, I came up with this list of five things people who are one to five years away from retirement should be doing.

 

There are plenty more steps, but I find these to be the most important.

 

 

Before you can know if you're ready to retire, you need to know what "ready" looks like.

That means getting clear on your Financial Independence number.

This is the amount of retirement savings you need to free of the need to work to cover your life expenses financially.

This number is personal to YOU.

It depends on your lifestyle, your health, your goals, and how long you expect to live.

It is not a figure you should borrow from a magazine article or a rule of thumb.

This is where I spend a lot of time with clients in these situations.

 

Your neighbor just retired at 58.

Your coworker says she needs $3 million to feel safe.

Your brother-in-law insists you should have paid off your house by now.

Here's the truth: NONE OF THAT MATTERS!!!

This isn't a competition.

Comparing your situation to others is one of the most reliable ways to make poor financial decisions.

Someone who retires with $800,000 and low expenses may be in far better shape than someone with $2 million and a lifestyle that demands every penny of it. Someone who keeps working at 67 because they love what they do is not behind They're making a choice that works for them.

Your retirement plan should be built around YOUR life, your values, and your circumstances.

Tune out the noise and focus on your own picture.

 

One of the biggest mistakes pre-retirees make is underestimating what they'll spend in retirement.

It's tempting to assume your expenses will drop dramatically once you stop working.

Sometimes they do.

Often, they don't.

The early years of retirement tend to be the most expensive.

You're active, you're traveling, you're doing the things you put off for decades.

Build a budget now based on how you actually plan to live.

 

As you approach retirement, your investment strategy should be having a real conversation with your goals, NOT JUST YOUR AGE.

The old rule of getting more conservative as you get older still has merit, but it's not the whole story.

A retirement that could last 30 years still needs growth.

Being too conservative too early is its own kind of risk.

At the same time, taking on too much equity exposure right before you need to start drawing down can be devastating if markets turn at the wrong moment.

The right allocation isn't determined by a generic formula.

It's determined by when you need the money, how much risk you can emotionally and financially absorb, and what you want your retirement to look like.

If you want to leave a legacy, travel extensively, or support family members, your investment strategy needs to reflect those intentions.

This is also an area I spend a good amount of time on with clients in this situation.

 

This may be the most underrated retirement decision of all.

Where you live in retirement affects nearly everything: your cost of living, your tax burden, your access to healthcare, your proximity to family and friends, your quality of life day to day.

And yet many people simply default to staying put without ever truly asking whether it's the right choice.

Some questions worth sitting with: Do you want to stay in your current home, or does it no longer fit the life you're planning? Are you in a high cost state that will take a significant cut of your retirement income? Is your community set up for aging in place, or will you eventually need to move anyway? Are the people and things that matter most to you nearby?

You don't have to move.

But you should choose to stay, not just end up there by default.

Give this question the serious thought it deserves while you still have time to act on the answer.

 

Retirement is one of the most significant transitions you'll ever make, and the years leading up to it are your best opportunity to get it right.

 

If you're not sure where to start, that's exactly what we're here for. Schedule a call with one of our advisors to see how ready you are for your retirement.