What to Do the Five Years Before You Retire

Ideally, you’ll start planning and saving for retirement decades before you actually retire. And during retirement, you’ll need to think carefully about how you manage your finances and how you take care of yourself to ensure you don’t outlive your savings. But what should you be doing in the five years or so before you retire, to make sure your retirement is a successful, financially bountiful, comfortable one?

Set the Right Mindset

Before anything else, it’s important to set the right mindset. Preparing for retirement in the five years before you formally retire is all about balance.

First, you need to think about the balance between living life the way you always have and living life in retirement; these are two drastically different lifestyles, and if you’re smart, you’ll attempt a gradual transition from the former to the latter. The smoother and more controlled your transition is, the less disruptive it’s going to be and the more successful your retirement will be.

Second, you’ll need to find the right balance of efforts to make for retirement preparation. If you become obsessed with preparing for retirement, it can come to completely dominate your life and end up stressing you out. On the other end of the spectrum, if you’re too passive or unwilling to invest time or effort, you might be overwhelmed when it’s time to fully retire.

Granted, you can always choose to delay retirement if you feel you’re not ready – but if you want to stick to your plan and retire successfully, it pays to adhere to some kind of schedule.

Give Yourself a Personal Finance Audit

Early in the planning process, you should give yourself a personal finance audit. This is an opportunity for you to evaluate your current finances, so you can accurately ballpark what you’ll have in retirement – and make any changes necessary to accommodate that future.

For example, you should look at:

Current Expenses

How much are you currently spending every month? Do you anticipate these costs to be higher or lower when it’s time to retire? Eventually, you’ll have a picture of how much income you’ll have in retirement, and you’ll be able to deduce whether your expenses make sense in that picture.

Current Income

How much money are you currently making? Where are these streams of income coming from and how many of them will continue to be available to you after you retire? Most people experience a significant income drop after retiring.

Retirement Savings and Investments

How much do you currently have saved? Which investments do you have and how are they being held? If you follow a rigid formula, like adhering to the 4 percent withdrawal rule, how much money would you be able to spend on a monthly basis?

Growth Projections

You’re not going to retire for another five years. Accordingly, if you continue investing at the same rate, and you see growth rates in line with historical averages, how much will your principal increase? How much would that increase your available spending money?

Invest in Your Health

Some of the biggest expenses you’ll face in retirement are related to healthcare and medicine. After retiring, you may have access to different or inferior health insurance coverage, and even if you’re thrilled with your coverage, you’ll likely face more health issues as you age.

Accordingly, now is a great time to invest in your health. You want to be in peak shape leading up to your retirement.

Checkups

If you have good insurance in place, make sure to attend all your regularly scheduled checkups. Proactive checkups may be annoying, especially if you have a busy schedule, but they’re incredibly cost effective and capable of catching issues early, potentially saving your life in the process.

Dental Issues

You also can’t afford to neglect your teeth. Depending on your current level of dental coverage, it may make sense to take care of long-standing dental issues now, while you’re younger and equipped with more income. For example, dental implants look and function like normal teeth, but they can replace broken or missing teeth in your mouth. As you get older, dental implant surgery becomes riskier, so it makes sense to have this procedure early when possible.

Surgeries and Treatments

If there are any other surgeries, treatments, or issues that you’ve procrastinated, now is the time to undergo them or address them. Work with your doctor to evaluate your overall health and take any measures necessary to improve it.

You can also reduce your lifetime medical and healthcare expenses by changing how you live your life. If you do this now, you’ll have even more time to improve your health before retirement – and your good habits will likely stick throughout your retirement years.

Dietary Habits

Pay close attention to what you eat. Avoid consuming too many calories and make sure you get a diverse mix of different fruits, vegetables, lean sources of protein, and whole grains daily. It’s also important to stay hydrated.

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