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3 Key Steps to Take Within 5 Years of Retirement

By Marjorie L. Rand, CPA, CFP®, RICP®

After decades of working and saving (and working and saving some more), you wake up one day and realize you are only 5 years away from your target retirement date. But even though you’re getting closer to your much-anticipated golden years, this is not the time to turn on cruise control. Don’t just count down the days until you pack up your office for good; rather, decide to finish the race stronger than you started. Now is the time to determine if you’re on track, build a cash reserve, and educate yourself on the ins and outs of retirement. 

1. Determine if You’re on Track

Do you have a magic savings number you want to hit before retiring? How far are you from this goal? By now, you’ve probably accounted for your future monthly expenses, the funds you’ll need to cover the fun things you plan to do in retirement, and large expenses like long-term care, if needed. But has anything changed in your life situation? If so, you may need to make adjustments. 

Try living on your planned retirement budget to see if it’s realistic and to catch any costs you may have overlooked. To start, try living on 80% of what you currently receive. Do you find yourself pinching pennies or did you find ways to decrease your budget even more? 

And while it may be impossible to predict exactly how long your nest egg will last, you can run your figures through different scenarios to evaluate what may happen if the market crashes, if you face unexpected healthcare costs, or if a spouse dies prematurely. Once you stress-test your savings in this way, you can come up with a plan to help mitigate these risks. If you wait until you are retired to take this step, it may be too late to make the changes necessary to maximize your retirement income.

2. Build a Cash Reserve

For many people, large portions of their retirement funds are in tax-advantaged retirement accounts or other investments. Since you’re likely not to cash out your funds on retirement day, it would be a good idea to build an easily accessible cash reserve to help cover unexpected  costs or offset a downturn in the economy. A good goal to have is one year’s worth of expenses in cash. 

You can, of course, stash away extra funds to build a bigger safety net. Most people generate their highest annual income in the years leading up to retirement. You might want to consider using the time and extra money to increase your IRA contributions or make catch-up contributions.  

For 2022, you can contribute $6,000 to your IRA and Roth IRA, and those over 50 can save an extra $1,000 annually. (1) Added contributions into a tax-deferred retirement account will also lower your income at tax time. By doing this, you’ll be saving on taxes and increasing your retirement savings.

3. Educate Yourself and Plan Accordingly

All those important retirement-related ages and dates are coming up, so take note and consider your options—and if you’ll face any coverage gaps or tax implications. 

For example, you can begin withdrawing Social Security benefits at age 62, but the longer you wait, the higher your monthly payment will be (with a cap at age 70). Can you afford to wait a few more years? We can do an analysis that will help you make that decision.

Also noteworthy: Medicare eligibility begins at age 65 for most. (2) But it’s a good idea to sign up for Medicare in the months leading up to your 65th birthday to hit your Initial Enrollment Period and avoid coverage gaps or added costs. (3) And if you plan to retire early, you face a gap in coverage. You may be able to stay on your employer’s plan through retirement benefits or COBRA, (4) but check with your benefits coordinator as fee structures vary. Purchasing your own health coverage is also an option, but for many, the high cost is a deterrent to retiring early.

Don’t Navigate These Critical Years Alone

These final years before retirement are critical for making decisions that have far-reaching consequences. Even if you have been saving and planning on your own up until this point, it’s smart to consider enlisting a financial advisor to help you plan for your financial future.

I would love to help you create a personalized retirement road map to address your concerns and guide you to financial independence. Schedule a 20-minute introductory call or reach out to me at 908-895-2406 or marge@randfinancialplanning.com to see if I’m the right fit to help you on your financial journey.

About Marge

Marjorie Rand is founder and financial advisor at Rand Financial Planning, a comprehensive, fee-only, fiduciary financial planning firm. Marge specializes in helping her clients plan for a secure retirement and navigate life’s many transitions through customized, tax-efficient retirement planning. She is passionate about empowering her clients to make the best financial decisions for their life and being by their side no matter what life throws at them. Marjorie spent many years as a CPA before founding Rand Financial Planning so she could be a go-to source for all her clients’ financial needs and help them avoid costly mistakes. She has a bachelor’s degree in accounting from Rutgers University and a Master of Science in Taxation from Fairleigh Dickinson University, along with the Retirement Income Certified Professional® (RICP®) and CERTIFIED FINANCIAL PLANNER™ certifications. When she’s not working, Marge enjoys boating, horseback riding, traveling, and hiking with her husband and her dog, Rangeley. To learn more about Marjorie, connect with her on LinkedIn.


(1) https://www.cnbc.com/select/401k-ira-contribution-limits-2022/#:~:text=The%20IRA%20contribution%20limit%20has,2021)%2C%20or%20%247%2C000%20total.

(2) https://www.medicare.gov/sign-up-change-plans/get-started-with-medicare?utm_medium=Search&utm_source=Gooogle&utm_campaign=New2Medicare&utm_content=pn-07282020_V5&gclid=Cj0KCQjw0K-HBhDDARIsAFJ6UGimbhQJOOXqsmoamBnnxyojnq-AjBvMwi9decRU-3BSclo69EU7djgaApAkEALw_wcB

(3) https://www.medicare.gov/sign-up-change-plans/how-do-i-get-parts-a-b/when-will-my-coverage-start

(4) https://www.dol.gov/general/topic/health-plans/cobra

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