What to Do as You Approach Retirement

When you started saving diligently for retirement decades ago, you may not have understood just yet what your retirement could look like. But with each year that draws closer to retirement, you’re probably getting a clearer picture of what you want to do, whether that’s traveling the world or spending more time with family.  

The good news is that if you have a personalized financial plan, you’ve likely already put a range of options in place that help gives you the financial flexibility to retire the way you want. Still, it’s always a good idea to revisit your plan to make sure it reflects your needs and wants as they evolve.  

One good check-in point for your retirement planning is when you’re about 10 years away, because by then you’ll have more clarity on your future plans — plus you’ll have an idea of where you’re at and where you’ll be when you want to retire. Here are some things you should do as you approach retirement to make sure you're on track.   

What to do when you’re 10 years from retirement 

Crunch the numbers 

Hopefully you’re already meeting with your financial advisor regularly, but now’s a good time to start diving deep into the details of your retirement plan.  

Sit down with an advisor to look through all your potential retirement income sources, which could include pensions, 401(k)s, IRAs, savings accounts, life insurance cash value, annuities, investment accounts, real estate investments, and your expected Social Security payouts. Your advisor can look through your range of options and provide an estimate of how much income you’ll be able to reliably generate when you retire. 

Once you know what your retirement income might look like, it’s time to build your retirement budget. This is where you get to dream about the specifics of what you want to do in retirement. Will you take a few big trips over the course of your retirement, or do you plan to go on several a year? What passion pursuits are you hoping to spend your time on? Start to zero in on how you think you’ll be spending your money. Will the income you generate support the life you want in retirement, including with inflation in mind?  

If estimates of what you’ll have are less than what you’ll need for any new retirement goals, you still have time to make some changes. Will you have to work a little longer than you anticipated? Are there other sources of income you haven’t considered? Talk through your options and any changes in strategy you might need to consider with your advisor.  

Update your risk tolerance 

As you get closer to retirement, your retirement investment strategy should shift to protect your assets against downturns in the market that could impact your retirement income — for instance, by shifting more of your portfolio from stocks to bonds.  

This is something you’ve probably already talked about with your advisor, but now that you’re closer to retirement, there may be solutions you haven’t considered or implemented yet — for instance, taking some of your investment portfolio and buying an annuity if you need more guaranteed retirement income that won’t be affected by the market.  

Repeat the process as you get even closer to retirement 

As you get closer to retirement — say, five years away — it’s time to check in on your retirement plan again to fine-tune the details even further. It’s important to run those numbers regularly to keep double-checking that you’ll have the retirement distributions you’ll need to cover your expenses. Remember that you’re balancing not only your lifestyle considerations but also any other goals you have, such as leaving a legacy, along with your tax situation. Your advisor can look at your whole financial picture and help you understand which of your assets can help you best with which goals. 

It’s also important to make sure that your retirement budget will work — with a little firsthand experience. Consider taking your retirement budget for a practice run for a few months to see how realistic it is so you can adjust it, if necessary.  

Get ready to enjoy the next chapter 

When you take the time to prepare your financial plan before retirement, you’ll be able to live more and worry less when you’re finally in retirement. All your hard work will have paid off — and all that will be left is to simply enjoy the retirement you’ve planned for with the people you love.