5-Year Retirement Countdown Checklist

Are you within 5 years of retiring? If so, here is a retirement checklist for you to reference on what you should be doing five, four, three, two and one year before retirement. Let the countdown begin!

Retirement Checklist:

5 Years Out: Why?

Define your “why” of retirement.

Why are you retiring? What is it about your current life that you want to change, improve and/or eliminate? Start to get very clear on the why. As part of this introspection, start to envision your life post-retirement. Then move on to designing that life.

4 Years Out: When and How?

Time to confirm you can afford to retire how and when you want to:

  • Create your retirement income plan. You should know where your income is coming from, how long it will last and what your expenses are going to be. There are typically three phases to retirement:
    1. Go-go
    2. Slow-go
    3. No-go

    Have you planned for these three phases appropriately? You’re likely going to spend more in the go-go phase than you will in the slow-go and no-go phases, and that’s all right. Plan to front-load retirement spending since that’s when you’ll likely feel up for those longer flights, drives, etc. Speaking of more travel: Make sure to update those estate documents as the last time might have been when you had kids.

  • Evaluate/reevaluate your debt! Don’t feel pressured to pay off all debt prior to retirement. Sure, that’s ideal, but at this stage of the game you may be better off investing more money for growth than paying down that debt aggressively, especially with interest rates being so low. Make sure you understand the opportunity costs of paying off debt early. It may or may not be the best approach.
  • Cut expenses and increase retirement saving. You are about to take a permanent vacation from work and the steady paycheck that comes with it. Now is the time to batten down the hatches; put the pedal to the metal to cut expenses and save like crazy. You are likely able to make additional catch-up contributions in your retirement accounts, so make sure you are taking full advantage of those during what are likely your peak earning years.
  • Don’t forget about health insurance/benefits. Once you turn age 65, Medicare handles pretty much everything (see parsecfinancial.com/medicare-guidance for all of our Medicare guidance), but if you’re retiring before that, make sure you have a health insurance strategy in place and expect it to change a couple of times before retirement. Two years is an eternity in the health insurance marketplace. Can you extend your employer-based coverage and pay the premium yourself? Should you? What options are available to you based on groups you belong to? Make sure you have a Plan A and a Plan B. The same applies for life insurance and disability insurance if those needs still exist in retirement. For many, they don’t. But most of us have life, disability and health insurance tied to our employer. When you retire, make sure you understand how that impacts your employee benefits.

3 Years Out: What?

Literally, what will you do with yourself all day?

What will retirement look/feel like? What is going to get you out of bed in the morning when you don’t have to keep getting up? We all need something to pursue. Those who don’t have this in retirement can start to lose some of their purpose.

Join a board or civic club or pick up a new hobby so that you’ll have something to get you out of the house on a regular basis and help you to not lose all contact with civilization. Stay engaged. The world needs you to continue — if not expand — your contributions!

2 Years Out: Where?

Do you plan to stay in your current home/community? Or do you plan to downsize, travel, or move closer to your children and grandchildren? Will you live out of an RV for a year and go where the road leads? Start to visit the places you are considering. Retirement is a big change; ideally you’re not relocating to a new community at the same time.

1 Year Out: Who?

Time for a relationship checkup.

Have you told your spouse about your retirement yet? Hopefully they’re on board and getting ready for much more quality time with you. For many couples, this can be the hardest part of retirement! All those little annoyances can become big problems when you’re spending all day with each other.

Make sure you two have some shared but also some individual interests so you can maintain your independence. Consider some marriage counseling if needed as you prepare to transition into this new phase of life. Find some groups with shared interests you can start to participate in if you don’t already. Having some weekly standing commitments with friends is a good thing as you head into retirement and will force you to continue to bathe regularly.

0 Years Out: Cut the Cord!

For many, this transition into full-time retirement is one of the most frightening times in their life. What will you do with all that newfound time? How do you adjust to no steady paycheck? How will it feel to start spending your retirement savings versus saving for retirement? Like many things in life, once you take that first step, the rest just seems to fall into place.

Hope you found our retirement checklist helpful. Good luck!

If you aren’t a Parsec client, we invite you to learn how we work with retirees.

Michael Baughman, CFP®
Senior Financial Advisor


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