The Pre-Retirement Checklist: 10 Steps for the Five Years Before You Retire

For decades, retirement may have felt like a distant idea. Then one day you realize it's only a few years away. That realization can bring excitement, and maybe a little anxiety. Will the money last? When should you claim Social Security? What about health insurance?

The five years before retirement are a uniquely valuable window. You still have a paycheck, time to make adjustments, and enough clarity about the future to plan in real detail. Use this checklist to make the most of it.

1. Picture Your Retirement

Before you run any numbers, describe the life you want. Where will you live? Will you travel, volunteer, help with grandchildren, start a small business or work part time? Will you stay in your current home or downsize?

If you're married, have this conversation together. It's surprisingly common for spouses to have different pictures of retirement, and it's much better to discover that now than after the retirement party.

2. Estimate Your Retirement Budget

Track your current spending for a few months, then adjust it for retirement. Some costs may go down, such as commuting, work clothes and retirement contributions. Others may go up, including travel, hobbies and especially healthcare.

Build two versions: a "basic needs" budget and a "comfortable" budget. This helps you see the minimum you need and what it would take to live the retirement you're hoping for.

3. Take Inventory of Your Income Sources

List every source of retirement income you expect:

• Social Security (yours and your spouse's)
• Pensions, if you have one
• Withdrawals from retirement accounts like 401(k)s and IRAs
• Other savings and investments
• Rental income or part-time work

Then compare your expected income to your retirement budget. If there's a gap, you still have time to close it by saving more, working a little longer, adjusting your plans, or a combination.

4. Make a Social Security Plan

You can generally begin claiming Social Security as early as age 62, but your monthly benefit is permanently reduced if you claim before your full retirement age. Waiting beyond full retirement age increases your benefit, up to age 70.

The right time to claim depends on your health, family longevity, other income, and, if you're married, how your decision affects your spouse's benefits. Create an account on the Social Security Administration's website to review your earnings record and see personalized benefit estimates at different claiming ages. Check your earnings history for errors while you still have time to correct them.

5. Maximize Your Final Working Years

These may be your peak earning years, and your expenses may be lower if your kids are grown. Consider:

• Increasing contributions to your workplace retirement plan.
• Using catch-up contributions, which allow people 50 and older to save more in many retirement accounts. Check the current limits each year, as they change.
• Directing raises and bonuses straight to savings.

6. Plan for Healthcare

Healthcare is one of the biggest and least predictable retirement expenses. Medicare eligibility generally begins at 65. If you plan to retire earlier, you'll need a plan to cover the gap, such as a spouse's employer plan, continuation coverage from your employer, or a marketplace plan.

Even with Medicare, there are premiums, deductibles and out-of-pocket costs, and not everything is covered. Learn the parts of Medicare, enrollment deadlines, and whether you'll want supplemental coverage. Missing enrollment windows can lead to lasting penalties, so mark the dates on your calendar.

It's also wise to think about long-term care, which can be very expensive. Learn your options while you're healthy and they're easier to plan for.

7. Pay Off Debt

Entering retirement without debt gives you remarkable flexibility. Every payment you eliminate lowers the income you'll need each month and reduces how much you'll have to withdraw from savings.

Aim to pay off credit cards and car loans before you retire. Many people also make it a goal to pay off their mortgage. If that isn't realistic, consider whether downsizing or other changes could help. If you need a framework, our guide to building a debt payoff plan works at any age.

8. Review Your Investment Mix

As retirement approaches, a large market drop can do more damage because you'll soon need to start drawing on your savings. Review how your money is invested and whether the level of risk still fits your timeline. Many people gradually shift toward a more conservative mix, but the right balance is personal, and being too conservative carries its own risk, since retirement may last several decades.

It can also help to set aside cash or other stable funds to cover a year or two of expected withdrawals, so you aren't forced to sell investments during a downturn.

9. Get Your Estate in Order

This step isn't about you. It's about the people you love. Make sure you have:

• An up-to-date will
• Current beneficiary designations on retirement accounts and life insurance
• Financial and healthcare powers of attorney
• A written list of accounts, insurance policies and important contacts

Then tell a trusted family member where to find these documents. A little organization now can spare your family a great deal of stress during an already difficult time.

A legacy isn't only financial. Clear plans, organized records and the example of a life lived wisely are gifts to the next generation too.

10. Do a Trial Run

About a year before you retire, try living on your projected retirement budget. Bank the difference between your current paycheck and your expected retirement income. You'll quickly find out whether your budget is realistic, and you'll add to your savings at the same time.

Also think about the non-financial side of retirement. Purpose, relationships and daily structure matter a great deal to how happy people are after they stop working. Plan how you'll spend your time, not just your money.

Your Next Step

Pick two items from this checklist to complete this month. A good place to start is your retirement budget and your Social Security estimate, since nearly every other decision builds on them. Then schedule the rest over the coming year. Retirement is a big transition, but with a clear plan, it can be a season of real peace and purpose. If you'd like guidance working through this checklist, NavLight offers retirement preparation coaching.