5 Smart Moves To Make 5 Years Before Retirement

5 Smart Moves To Make 5 Years Before Retirement

If retirement is within 5 years, it’s time to take a look at smart moves to make before you decide to retire. It’s your move…

1. Boost and Balance Your Savings

The 5 years leading up to retirement can have a crucial impact if you started saving for retirement later in life. There are two areas that you want to focus on boosting and balancing.

The first, boosting your retirement savings. The IRS allows a catch-up contribution to those older than 50. On top of the elective deferral amount ($18,500 in 2018) the catch-up amount allows those who qualify for an additional $6,000 in 2018. Give your retirement savings a big boost and enjoy the tax benefits too.

The second, focus on a balance. In retirement, it’s important to have both retirement tax-deferred savings (401k, IRA,etc.) and non-retirement outside savings. When you take distributions from retirement accounts after age 59 ½, those distributions then become taxable. To balance out your taxes in retirement, consider building outside savings and investments. This will allow you to examine your tax situation each year in retirement rather than being forced to pay taxes on all spending in retirement.

Your Move: Boost and balance your overall savings. It is important to have cash reserves outside of retirement accounts when you retire.

2. Refocus Your Budget

For some people, it is hard to understand exactly how much you are spending on a weekly, monthly, or yearly basis. When a person is working it’s easy to incur a lot of unnecessary spending and develop poor spending habits. You have a regular income and cash flow that isn’t as restrictive. If you spend a little more one month, there may be opportunities to make more money with overtime, bonuses etc.

Things change in retirement. The first 5 years after retirement are often the hardest to get used to. Operating on a more restricted budget is an adjustment. You want to enjoy life and do things you’ve always wanted to, now that you have the time. It’s important to avoid overspending early in retirement. You’ll need your savings to last 30 + years and you don’t want to spend a huge portion in the beginning.

How do you prepare yourself for this? Consider establishing healthy spending habits now in the 5 years before retirement. This will help ease the dramatic change in retirement. This is simple to understand, but harder to execute.

Your Move: Establish healthy spending habits now to avoid major lifestyle sacrifices in retirement.

3. Re-Think Retirement Lifestyle

If your financially and emotionally ready – you’re probably getting a countdown ready! You’ve even day dreamed about when work will no longer control your day. Just as our situation changes over time, your thoughts of retirement may have changed over time. Now that you’re close, re-think what retirement is going to look like.

Perhaps you thought you and your spouse would be off to sunnier places or downsizing to an RV to see the world. But now you look at your children and grandchildren and you completely changed that dream to being close to them. Or maybe now you’d like to move. Harsh winters can be tough and you’ve decided to move away. Or you’ve never really thought about what your going to do with an extra 40 + hours a week.

The point is that many retirees fear isolation and boredom in retirement. Work has becomes part of your identity and when it all of a sudden stops… it can feel like you’ve lost part of yourself.

How do you avoid it? Re-thinking retirement. Re-examine what you, your spouse or your significant other envision for retirement. Discuss what hobbies you’d like to get into. Test those hobbies out now to make sure you actually enjoy them. Discuss your living situation and what options you have. Don’t let any paid vacation time go to waste. Take advantage of vacation time and test the waters with what retirement means for you. The more you think and discuss retirement the smoother the transition.

Your Move: Your vision of retirement may have evolved. It is time to discuss and test out retirement now, before you call it a career.

4. Start To Look Into Healthcare Options in Retirement

Some people are more inclined to prolong retirement because of healthcare coverage. Finding healthcare coverage that is not provided as an employee benefit can be expensive. It’s important to consider your options carefully so it does not have to become a road block to retirement.

An option to consider if you have a high deductible plan is to learn whether your employer offers an Health Spending Account or HSA. If yes, begin to max out your contributions if you are not already doing so. Money placed into this account is pre-tax and can be used to pay for deductibles, co payments or other qualified medical expenses. This can help bridge the gap between retirement and when you are become eligible for Medicare coverage and help make the decision to retire easier if healthcare costs are a major concern.

Your Move: Explore options based on your personal health situation. Don’t forget to ask if your company offers an HSA.

5. Consider Doing Home Improvements While You Still Have A Paycheck

A lot of individuals wait until retirement to tackle that big home improvement project. Why? Because they have more time and aren’t distracted by all that is going on with work.

If you’ve discussed wanting to stay in your current home for the majority of retirement, consider doing any major home improvements while you still have a steady paycheck coming in. This will be less of a strain on your budget before retirement.

If you’re planning on downsizing in retirement or selling your home, consider looking at what – if any – home improvements would be wise to make. This may be a repair or update that is needed in order to sell your home.

Your Move: Start considering housing options before you retire on a fixed retirement income.

In Summary:

Everyone’s situation is different and change is inevitable. Deciding to retire is exciting but can also be frightening… if you don’t financially, emotionally and mentally prepare for it. Use the 5 years before you retire to make the transition into an easier retirement.

If you are uncertain about being financially, emotionally and mentally prepared for retirement and live in the WNY area, we can help! We’ve helped individuals and families find the clarity they need to move forward into retirement with confidence. Book your own retirement confidence finder appointment today to get the answers and peace of mind that you need! It’s Your Move

We Help Seniors Live Better Financial Lives

Find Your Retirement Confidence


About the Authors


Keith Maderer has been a Financial, Investment and Tax professional in the Buffalo-Niagara region for over 30 years. He helps individuals and families to Clarify their needs and goals, Solve their problems, and Simplify their life to avoid the common pitfalls that get in the way of enjoying life and retirement.

He is an author, an entertaining and humorous speaker that enjoys captivating audiences with stories, anecdotes, and messages that inspire and motivate others to achieve their goals.


Chelsea Maderer is a Financial, Investment and Tax Advisor in the Buffalo-WNY region. She helps individuals and families to Clarify their needs and goals, Solve their problems, and Simplify their life to avoid the common mistakes that get in the way of enjoying life and retirement.

For more information please visit: http://SFTAweb.com.

Recent Blog Posts

Leave a Comment