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Be Wise With Money

Retirement Countdown: Planning Tips for 15, 10 & 5 Years Out

Counting down to retirement

The ticking of your retirement clock gets a little louder each year. So when the stock market dips and spikes, how can you take a closer listen to the needs of your investments and retirement plan?

That's where setting alarms at key dates can help keep you on track.

"Whether you want to live in your current home and volunteer down the block or travel the world several times a year, it won't just happen on its own," says Karen Birr, manager of Retirement Advice Tools Consulting for Thrivent Financial. "The retirement lifestyle you want takes planning."

15 years to plan retirement15 years from retirement

Career and family needs may be top of mind now, but take time to think about your retirement. Where will you live? How will you spend your time? Dream a little and talk it over with your significant other. Do your visions match?

"Once you've determined your lifestyle – put a price tag on it," says Birr. "Consider how much of your current income you will need to support that lifestyle."

Your earnings are likely at or approaching their peak now, so it's a great time to work with a financial representative for a quick check on your financial footings. Some strategies to discuss:

  • In case of an emergency, have three to six months of savings ready to avoid dipping into your retirement funds.
  • Put as much into your IRA, 401(k) or other retirement vehicle as possible – and plan to increase that contribution as typical midlife expenses decline. (Think college expenses or a mortgage.)
  • Work to pay down any debt you have.

As Birr adds, it pays to think about the long term – particularly in the face of stock market ups and downs. "Market volatility can cause some trepidation, but that's just part of the economy," she says. "It's important to keep your assets diversified so you can ride that out. And to get out of the market at this stage of your life would most likely be to your detriment."

Another key task for the 15-year mark: Plan how to protect your loved ones in case you die prematurely or become disabled. Consider adding the following to your protection strategy:

  • Life insurance
  • Disability income insurance
  • Estate planning

Decide who you want to be your health care agent or have power of attorney if you're unable to make decisions – especially if you’re single.

Nearing retirement in 10 years10 years before retiring

The 10-year mark is the time to double up on all your earlier efforts. Keep saving and maximizing contributions to your IRA, 401(k) and other retirement accounts.

Continue to pay down any debt – including your mortgage – and make sure your investments are growing at the rate you need. "By this point, you should have a more realistic picture of your retirement budget," says Birr. "Put some numbers to it."

Be sure to factor in all sources of income – like pensions, savings and Social Security. If the numbers don't add up, it may be a good time to bring in your financial advisor to help you reevaluate your goals.

And if your investments and savings match your plans, now may also be a good time to rebalance your portfolio, Birr says. Shifting to a somewhat more conservative approach may make sense as you move into your last decade of full-time work.

5 years to retire5 years to go until retirement

Throughout all the anticipation, the time is almost here. But it's not the time to ease up. In fact, you'll want to repeat the activities from the previous checkpoints – and with greater attention to detail.

  • Reassess your tax situation.
  • Make sure your assets are set and planned and that your legal documents are up to date.
  • Evaluate when you will start taking Social Security and which savings buckets you'll tap first.

Your financial representative can help you create and test sample budgets so you have an idea of how much you'll spend. And when the time comes? "Pull the trigger," says Birr. "By that point, everything should be in place."

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