The Retirement Checklist for Five Years Before You Retire
Key Takeaways
- The last five working years are when adjustments still have time to matter, so treat them as a sequence of tasks rather than one decision.
- At five years out the work is measurement: your real spending, your account types, and what your Social Security statement actually projects.
- At three years out the work is positioning: tax bracket planning, account structure, and the health insurance bridge if you retire before 65.
- In the final twelve months the work is sequencing: the order you leave, elect benefits, and take your first withdrawal.
- Retiring on time is usually a scheduling problem rather than a savings problem, and the schedule has to exist before the date arrives.
Five years out is the point where retirement stops being a number in a spreadsheet and starts being a date on a calendar. It's also the last stretch where most of the meaningful levers are still available, because any adjustment still has five more years to work.
What tends to go wrong in these years isn't a bad decision, it's a missing one. Savers arrive at their target date having accumulated plenty and never sequenced the moves that turn a balance into a paycheck, a benefit election, and a health insurance plan.
The result is a retirement that slips a year or two, not for lack of money, but for lack of a schedule.
In this guide, you'll see:
- Why the last five years are the ones that set the date
- What to do at five years out: build the baseline
- What to do at three years out: turn the plan into positions
- What to do in the final twelve months: sequence the exit
Table of Contents
| Timeframe | The Work |
|---|---|
| Five years out | Measurement: real spending, account types, Social Security statement |
| Three years out | Positioning: tax bracket planning, account structure, health insurance bridge |
| Final twelve months | Sequencing: separation date, benefit elections, first withdrawal |
Why the Last Five Years Are the Ones That Set the Date
Accumulation is forgiving. A missed contribution in your forties has decades to be corrected.
The five-year window is different because the decisions now carry hard deadlines: benefit elections have filing dates, Medicare has an enrollment window tied to your 65th birthday, and employer plans have separation rules that depend on how old you are on the day you leave.
Miss the timing and the option doesn't reprice. It disappears.
The questions change character too: not "am I saving enough," but "what will I actually spend," "where will each dollar come from," and "what does that do to my tax bill." Those are planning questions rather than investing questions, and they're what we spend most of our time on with couples five to ten years from retiring.
Five Years Out: Build the Baseline
This first year is about measurement: everything downstream depends on numbers you may not have yet.
Start with actual spending, not a budget, but twelve months of real outflows, separated into what continues in retirement and what doesn't. Commuting, plan contributions, and payroll taxes generally go away. Travel and healthcare often go up.
Next, inventory your accounts by tax treatment rather than by institution: taxable brokerage, tax-deferred 401(k) and traditional IRA, and Roth. That three-bucket view determines how much control you'll have over your taxable income later, and five years is enough time to change the mix through contribution choices and conversions.
Then pull your Social Security statement and read what it projects rather than what you remember, noting the benefit at 62, at your full retirement age, and at 70. Full retirement age depends on your birth year. Do the same for any pension, including whether it offers a lump sum and what its survivor options cost.
Finally, if you're 50 or older, confirm you're using catch-up contributions in your workplace plan and IRA. Two recent changes matter. A larger workplace catch-up applies in the years you turn 60 through 63: $11,250 in 2026 rather than $8,000. And if your prior-year wages from that employer topped $150,000, catch-ups must now go in as Roth rather than pre-tax, turning a deduction you may be counting on into an after-tax contribution. These amounts, the wage threshold included, are set annually, so verify the current year's figures.
The dynamics here are much the same for a married couple at 59 with five years to go: the measurement work has to come before any of the positioning work is meaningful.
Three Years Out: Turn the Plan Into Positions
With a baseline in hand, the middle of the window is where you make structural changes, because each one needs runway.
Map your projected taxable income year by year through your first decade of retirement. The years between your last paycheck and the start of Social Security and required minimum distributions are often the lowest-income years you'll ever have, which makes them the natural window for Roth conversions or for realizing capital gains deliberately.
RMD start ages have been changed by legislation more than once and depend on your birth year, so confirm which applies to you.
If you plan to retire before 65, this is when the health insurance bridge gets solved. Marketplace coverage, COBRA continuation, or a spouse's plan are the usual paths, and marketplace premium subsidies are tied to reported income, so your withdrawal and conversion decisions and your insurance costs are one decision, not two. The enhanced subsidies that softened that link expired at the end of 2025 and have not been extended, so for 2026 the hard cliff at 400% of the federal poverty level is back: a dollar over that line forfeits the entire credit rather than trimming it. Confirm the rule in force for your planning year. If you have an HSA, note that contributions must stop once Medicare coverage begins, and Part A can apply retroactively for several months, which affects when your final contribution can be made.
This is also the point to review your allocation against a withdrawal timeline instead of a risk questionnaire, set aside a short-term reserve for early spending, and update beneficiary designations and estate documents.
These middle years are why the final decade of work is so important: the structural changes are still cheap here and get expensive or impossible later.
The Final Twelve Months: Sequence the Exit
The last year is about order of operations. Confirm your separation date against the rules that key off age: penalty-free retirement account withdrawals generally begin at 59 and a half, and a separate provision can allow penalty-free access to the plan of the employer you're leaving if you separate in or after the year you turn 55.
A few weeks in either direction can change which rules apply to you.
Decide what happens to your workplace plan: leave it, roll it, or move part of it.
Order matters here more than anywhere else on this list. If you separate at 55 or later and may need that money before 59 and a half, rolling the plan into an IRA gives up the exception just described. The IRS applies it to employer plans, not IRAs, and the 10% penalty comes back on every dollar. Leave enough in the plan to cover those years, then roll the rest later.
Confirm your Social Security claiming plan and, for couples, coordinate both decisions together, since the higher earner's choice affects survivor benefits.
If you're turning 65, calendar your Medicare enrollment window: seven months, the three before your birthday month, that month, and the three after. Keep working past 65 with employer group coverage and an eight-month special enrollment period runs from when that coverage ends instead.
Miss both and Part B adds a permanent penalty of 10% for each full twelve-month period you could have enrolled. Note too that Medicare premium surcharges use the tax return from two years earlier and are a cliff, not a phase-in: in 2026, a dollar over $109,000 single or $218,000 joint moves you a full tier for the year. Those thresholds change annually, so check the current year before sizing a conversion.
Then decide which account funds your first year of spending, and write it down. Leaving without that answer is how a well-funded plan ends up improvising, which is exactly the financial red zone problem: the decisions sit close to the goal line with little time to recover.
What should I do first if I am five years from retirement?
Measure your actual spending over the past twelve months and separate what continues in retirement from what stops. Nearly every later decision depends on that number being real rather than estimated.
Is five years enough time to change my retirement outcome?
Five years is enough to change contribution levels, adjust the mix of taxable, tax-deferred, and Roth accounts, plan conversions across multiple tax years, and solve the health insurance bridge. Outcomes are never guaranteed, but these levers still have runway at this stage.
When should I decide on my Social Security claiming age?
Have a working plan by the three-year mark and confirm it in the final year, once your projected retirement income and tax picture are settled. Claiming can begin at 62, full retirement age depends on your birth year, and delaying past full retirement age increases the benefit up to age 70.
What is most often missed in the last year before retirement?
The order of operations. People know how much they have saved but not which account funds the first year, how the separation date interacts with age-based withdrawal rules, or how this year's income affects a Medicare premium or insurance subsidy later.
Turn This Checklist Into Your Own Schedule
Each task on this list has a deadline attached to your birthday, your separation date, or your Social Security filing, not to the calendar year. Missing one doesn't reprice the option, it removes it.
If you want help building your own year-by-year schedule, see how we work together to sequence the last five years before you retire.
This content is for educational purposes only and is not investment, tax, or legal advice.
