Retirement is closer than it feels. And that's actually a good thing.
The five years leading up to retirement are one of the most important windows for financial planning. This is when small adjustments can have a meaningful impact on your retirement income, tax strategy, and overall confidence heading into this next phase of life.
Done thoughtfully, this period allows you to replace uncertainty with clarity, and make decisions that support the lifestyle you've worked toward.
Here are five key areas to focus on.
1. Understand Your Retirement Income Plan
Before anything else, it's important to understand what your income will look like once you stop working.
This includes Social Security, pensions, portfolio withdrawals, rental income, annuity income, and any other sources. From there, compare that number to your expected expenses. This will include fixed monthly expenses, lifestyle spending, healthcare costs, travel, charitable donations, and large one-time expenses such as new automobiles.
We often see individuals within five years of retirement who haven't fully mapped this out, and identifying gaps early creates more flexibility in how you address them. That may mean adjusting your savings, retirement timeline, or withdrawal strategy.
2. Revisit Your Investment Strategy
The portfolio that helped you accumulate wealth may not be the same one that supports you through retirement.
As you approach retirement, sequence-of-returns risk becomes more relevant. A market downturn early in retirement can have a lasting impact on long-term outcomes.
This is a good time to evaluate whether your investment strategy aligns with your time horizon, income needs, and comfort with risk level, while also considering how different accounts will be used to generate income efficiently.
3. Evaluate Your Social Security Timing
Deciding when to claim Social Security is one of the most important retirement decisions—and one that's often oversimplified.
While benefits can begin as early as age 62 or be delayed until age 70, the right decision depends on several factors:
- Health and longevity expectations
- Spousal benefits
- Other income sources
- Tax considerations
Running the numbers in the context of your full financial plan can help you make a more informed decision rather than defaulting to a single approach.
4. Update Your Estate and Legacy Plan
Your estate plan should reflect your current life, not where things stood years ago.
This includes reviewing your will, trusts, beneficiary designations, and powers of attorney. For business owners, this may also involve succession planning or exit considerations.
This is also where coordination matters. Financial planning, tax strategy, and estate planning should work together (not in isolation) to support your long-term goals and legacy intentions.
5. Bring Your Plan Together With Professional Guidance
Five years out from retirement is not the time to operate on autopilot.
A comprehensive review can help uncover planning opportunities you may not have considered, such as tax-efficient withdrawal strategies, Roth conversions, Medicare planning, and long-term care considerations.
Working with a fiduciary advisor means having guidance that is aligned with your best interests and focused on helping you make informed decisions across all areas of your financial life.
Retirement Planning to Make the Next Five Years Count
The years leading up to retirement are some of the most impactful in your financial life. With the right planning, they can help set the foundation for a more confident transition into retirement.
If you'd like to better understand where you stand, we invite you to schedule a complimentary consultation with our team.
Frequently Asked Questions
What should I do financially 5 years before retirement?
The five years before retirement are a critical window for financial planning. Key priorities include mapping out your retirement income sources, revisiting your investment strategy to manage risk, evaluating when to claim Social Security, updating your estate plan, and working with a fiduciary advisor to bring everything together into a cohesive plan.
How much money should I have saved 5 years before retirement?
There is no single answer, as the right number depends on your expected expenses, lifestyle goals, income sources, and health care needs in retirement. What matters most is understanding your personal income gap—the difference between what you expect to spend and what your confirmed income sources will cover. A financial advisor can help you assess where you stand and what adjustments, if any, may be needed.
When is the best time to claim Social Security?
Social Security can be claimed as early as age 62 or delayed until age 70. Claiming later generally results in a higher monthly benefit, but the right timing depends on your health, spousal situation, other income sources, and tax picture. There is no universal answer; the best approach is to evaluate your options in the context of your full financial plan.
What is sequence-of-returns risk, and why does it matter before retirement?
Sequence-of-returns risk refers to the danger of experiencing significant market losses in the early years of retirement, when your portfolio is at its largest and withdrawals have begun. Poor early returns can deplete a portfolio faster than average returns would suggest, making it harder to recover over time. Reviewing your asset allocation and risk level before retirement (not after) is one of the most effective ways to manage this risk.
What does it mean to work with a fiduciary financial advisor?
A fiduciary financial advisor is legally and ethically obligated to act in the best interest of the client, not to recommend products based on commissions or incentives that would better benefit the advisor. Working with a fiduciary means the guidance you receive is aligned with your goals, your situation, and your long-term financial well-being.
Do I need to update my estate plan before retirement?
Yes. Retirement is a major life transition that often prompts changes in how assets are held, distributed, and preserved. It's important to review your will, trust documents, beneficiary designations, and powers of attorney to confirm they reflect your current wishes and circumstances, especially if significant time has passed since your last review.
Should I consider a Roth conversion before retirement?
Roth conversions can be a tax-efficient strategy in the years before retirement, particularly if you are in a lower tax bracket than you expect to be later. Converting pre-tax retirement assets to a Roth account means paying taxes now in exchange for tax-free withdrawals in retirement. Whether this makes sense depends on your current income, projected future tax rates, and overall financial plan.
About Brian
Brian Falls, CFP® CKA®, is a Wealth Advisor at Mueller Wealth, located in Oak Brook, IL, and Sarasota, FL, with over three decades of experience specializing in faith-based investing, structured products, and comprehensive financial planning. Inspired by the life-changing impact of disciplined saving, he leverages his MBA and dual certifications to provide systematic guidance to clients across Illinois and Florida.
To schedule a meeting, call 312-847-7334, email, or send us a message online.
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