A 10-Year Checklist For Retirement Planning

Ten years before you retire is a good time to start preparing so you're in great shape when the time comes.

image of charts and glasses with the words retirement plan
(Image credit: Future)

Are you ready to retire? By 2030, one out of five Americans will be retirement age. Every Baby Boomer will be over 65, and the vanguard of Generation X will be close on their heels. If you’re on the back end of your fifties today, you’re in the final stretch of the rat race.

“This is the opportunity to correct any past mistakes and do the planning needed for a secure retirement,” says David John, senior strategic policy adviser at AARP’s Public Policy Institute in Washington D.C. “Even if you’ve done nothing, there’s still time to put yourself on a sounder footing.”

No pressure, of course. But navigating this stretch is easier said than done as you juggle work, saving, investing and helping the kids leave the nest. If you’re unsure where to begin, here’s a 10-year, year-by-year checklist suggesting when to handle different parts of your financial plan as you approach the retirement finish line.

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10 years: Save what you can and think about how you want to live

With a decade to go, figure out how you’ll save as much as possible, says Karen Birr, manager of advice services at Thrivent, a financial services company in Minneapolis. Starting at age 50, you can contribute more per year to tax-advantaged retirement plans. In 2023, you can put up to $30,000 in a 401(k) and up to $7,500 in an IRA outside of work. 

“If your employer offers matching contributions, at the very least, contribute enough to get the full match so you get all the free money,” says Birr. For example, if your employer matches up to 6% of your yearly salary in a 401(k), aim to contribute at least 6%.

This is a good time to visualize what day-to-day life will look like in retirement. “Use your imagination and plot your ideal week on a calendar,” says Tim Maurer, chief advisory officer at SignatureFD, a financial adviser firm in Atlanta. He says this exercise can make your future retirement feel more real and motivate you to save. Figure out when you’ll spend time socializing with friends and family. Otherwise, retirement can quickly get lonely because you won’t see co-workers every day.

If you’re married or in a committed relationship, AARP’s John says, make sure you’re both on the same page. “People assume their spouse or partner has the same vision, but often they do not, especially if there’s a major age difference.” Don’t wait until retirement to find out you planned on traveling Europe while your spouse expects to stay home and golf every day.

9 years: Fine-tune your investments — allocation, allocation, allocation 

Check your investment allocation. As you get older, shifting your portfolio from stocks to bonds makes sense to protect your savings. For example, the rule of 120 says to subtract your age from 120 to find the maximum amount you should hold in stocks. If you’re 55, you should have up to 65% of your portfolio in stocks, with the rest in bonds. If you feel behind on your savings, you could aim to be on the higher end for stocks for more growth. “You need to balance the risk of losses against the risk of not having enough money in retirement,” says Thrivent’s Birr.

But don’t take this too far. “There’s a temptation when you don’t have enough savings to try beating the market with risky investments,” warns John. High-risk investments and strategies — such as crypto, options or day-trading — are more likely to blow up in your face than to pay off. Unscrupulous companies prey on people worried about retirement. “I get 10 to 15 emails a day in my spam folder with ‘can't-miss’ ways to build my savings. They’ll improve the lives of the people making the offer but not me,” says John.

If you’re unsure how to balance your portfolio, look for a target-date fund. You pick the year you want to retire, and a professional investment manager builds a suitable portfolio for your timeline. 

Imagine what could go wrong over the next few years, says Jennifer Schoonmaker-Dasch, a certified financial planner with Edward Jones in Lexington, N.C. “We plan and plan, but life doesn’t always cooperate.” Imagine how you would adjust should something serious force you out of work early, such as a major illness or downsizing. 

8 years: Go prospecting — look for money you may have forgotten about

Make a list of every job you’ve ever worked. Did you leave any retirement savings behind? Old pensions? Retirement accounts? Employee stock? This happens surprisingly often, with roughly 29.2 million forgotten 401(k)s holding an average balance of $56,616, according to Capitalize, a technology platform for workplace retirement plans. You can roll over your old retirement plans into your current workplace plan or an individual retirement account because it's easier to manage everything in one place. 

List your bank accounts, and see if there’s any idle cash not earning much of a return. Interest rates are at a 22-year high. Move that money to a high-interest savings account or a certificate of deposit. You can buy a 10-year CD and lock in a guaranteed 4% interest rate on otherwise idle cash.

This would be a good time to get a full physical as well, especially if you haven’t been seeing a doctor regularly. Get advice on the proper diet, exercise and medication you need now so you’re set up for a healthy and long retirement.

7 years: Make plans and give them test drives

Your goal this year is to set your retirement budget. “Put a price tag on your vision. How much will it cost to live that way?” asks Birr. List all your expected expenses for housing, food, taxes, travel, hobbies and insurance. 

Factor in what you’ll owe for Medicare Part B premiums, which cost $164.90 per month in 2023 and usually go up each year to match rising health care costs. You may also decide to buy a Medicare Advantage plan or a Medigap plan plus a Medicare Part D plan for prescriptions. These private insurance plans cover the out-of-pocket costs Medicare doesn’t cover. You can collect quotes from an insurance broker now, or get estimates from Medicare

Continue thinking of good and bad scenarios and how they might change your retirement vision, goals and budget. How’s your health? Are your friends moving away? Where are your kids living? “Perhaps you never thought you’d move, but then you have grandchildren on the other side of the country,” says Schoonmaker-Dasch of Edward Jones.

6 years: Assess your income situation — will you have enough? 

Now that you’ve got your ideal budget from last year, estimate your future retirement income to see if you can cover everything. The 4% rule is one way to estimate. Multiply your expected retirement balance at retirement by 4% to see how much you could take out per year. For example, if you expect to have a $1 million portfolio, this rule predicts that you could safely withdraw $40,000 a year from your savings, adjusting this amount over time for inflation. 

Add this to any other retirement income you expect, such as a pension, plus Social Security. If you don’t know your upcoming Social Security payment, you can get an estimate on the Social Security website.

SignatureFD’s Maurer recommends meeting with a financial adviser this year to stress test the assumptions in your retirement plan. You still have time to adjust, if needed.

If you wish you had saved more in the past, AARP’s John says, you certainly aren’t alone. “No matter how much someone has, they always wish they had saved more and regularly think they’re a failure.” Leave those feelings behind and focus on how you can build up your savings going forward. Many workers at this stage are in their peak earning years and winding down other expenses, such as taking care of the kids. Put that extra money to good use for your future.

5 years: Get granular — look at where your money comes from and where it goes 

With retirement getting closer, decide when you’d like to start taking Social Security. While you can begin payments at age 62, each year you delay increases your payment. For example, you might receive $1,400 a month starting at 62, $2,000 a month starting at 67, or $2,480 starting at age 70. That increase lasts for the rest of your life, so think carefully before starting payments.

If you have any debt, especially high-interest debt such as credit cards, consider how you could pay it off over the last five years before retiring. That removes an ongoing monthly expense from your budget.  John Peoples, a 62-year-old general manager of the Hockessin Athletic Club in Hockessin, Del., says this was a priority for him and his wife, Beth, 63, as they prepared for retirement a few years in the future. “We didn’t want these obligations hanging over our heads,” he says.

Think of how you’d cover long-term-care costs in retirement, such as in a nursing home. Genworth estimates the average cost of a private room in a nursing home at more than $9,000 a month — over $108,000 a year. One way to cover the costs is through a long-term-care insurance policy. Another option is a hybrid life insurance policy. If you need long-term care while you’re alive, you’ll receive money from the policy, and if you don't ever need care, the policy will pay your heirs the insurance death benefit. 

4 years: Make sure you’re covered, financially and medically

At this stage, John from AARP says, you might consider investing part of your portfolio in an annuity. These insurance contracts turn your savings into future income, which can be guaranteed to last your entire life. They can also grow your savings during these last few years before you retire and start collecting income, often with a guaranteed return and protection against market losses. Annuities have considerable surrender charge penalties if you cancel before the contract ends, though. Don’t buy one unless you can commit to the timeline.

If you plan to retire before qualifying for Medicare at age 65, decide now how you’ll maintain health insurance coverage. Your job could offer COBRA, allowing you to extend the same health insurance for another 18 months. Your premiums will increase because your employer will no longer have to chip in. 

If you’re married and your spouse has insurance at work, see if you could enroll in that plan. Finally, Affordable Care Act (Obamacare) plans are available. The premiums are based on age and more expensive for someone near retirement. However, a government subsidy is in place through 2025, so the premiums cannot cost more than 8.5% of your annual income for a silver, or moderate-level, plan.

3 years: Give your retirement a tryout 

Now would be a good time to test-drive your dream retirement lifestyle to see if it’s what you expected. “My friend thought he would love owning a coffee shop in retirement,” recalls Maurer, the financial adviser in Atlanta . “He tried managing one temporarily and found out the job was mainly washing dishes. He lasted less than a month.” Take a few weeks, if possible. If you want to live somewhere else, such as at the beach, stay there to see if it’s still enjoyable for a longer stay.

Before retiring, consider converting pretax retirement accounts, such as a traditional IRA or 401(k), into a Roth version. You’d owe taxes upfront on any amount transferred, but the future withdrawals would be tax-free. This move could make sense if you scale back your work and are now in a lower tax bracket.

You should also review your estate plan. Make sure your will is up to date, if you have one. If you don’t, write one. Also check the beneficiary designations on your various accounts, retirement plans and life insurance policies. These instructions override your will. If the wrong person, such as an ex-spouse, is listed he or she would inherit the accounts when you pass away instead of your other heirs.

Finally, consider having an estate lawyer create a financial power of attorney and a living will/advance health care directive, naming a trusted family member or other loved one to make your financial and medical decisions when you cannot.

2 years: Go for one more retirement review 

Consult with a financial adviser again to ensure you’re ready to retire with your current goals and vision. Discuss your retirement budget, expected income, portfolio allocation and insurance plan to make sure the numbers all work out. If you’re still short, consider whether you are willing to work longer to save more or if there’s anything in your retirement budget you could adjust.

Consider a phased-in retirement two years from now, where you gradually reduce your hours or switch to a more enjoyable job rather than stopping cold turkey. “Is there a job you always dreamed of doing, like working at a nonprofit?” asks Maurer.

Working — even if it means a pay cut — can help your savings last longer and keep your mind sharp. Some part-time work could also offer health insurance benefits, which is especially useful if you retire before turning 65 and need something until Medicare starts.

“Sitting on a beach might be fun for a couple of weeks, but after that?” asks Peoples, the health club manager in Delaware, who agrees with not stopping work entirely when he retires. He currently volunteers at an animal rescue and plans to increase those hours while also considering options for part-time work, including babysitting his grandkids.

1 year: Ready, set… retire already 

“People want to end their career in a way they can be proud of,” says Schoonmaker-Dasch, the planner with Edward Jones, noting that the last year before retirement is a time to tie up loose ends. Think of the last major project you want to wrap up or how you could adequately train and hand the reins over to the next person taking over. Leaving on a positive note can help with the emotions of this life transition.

Plan how to best use your remaining work income, such as using your last bonus to pay off your car so you can retire debt-free. If you still have family and friends relying on you financially, Schoonmaker-Dasch says, it's time to set boundaries. “Warn your 25-year-old son that he’s going to start paying his cell phone bill.”

One budget game-changer if you’re flexible is to move to a lower-cost area right after you retire, says Maurer with financial advisor firm SignatureFD. “Perhaps you move from the East Coast to a state like Florida, Tennessee or Texas.” Not only do these states have a lower cost of living, but they also don’t charge income tax. “You could make an upfront profit on the home sale and then pay less every day for the rest of retirement.” 

Peoples doesn’t know exactly when his last year of work in Delaware will be but says he and his wife feel prepared, thanks to their planning over the past decade. “When that day comes, we’ll be ready to enjoy the opportunities retirement presents. There’s still a lot of highway ahead of us.”

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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David Rodeck
Contributing Writer, Kiplinger's Retirement Report