Five Years Before Retirement: The Pre-Retirement Checklist

Most people walk into retirement instead of planning into it. They keep working, keep saving, hit a target date, and one Friday they have a retirement party at the office. The plan, such as it exists, is a 401(k) balance and a Social Security estimate. The decisions about how retirement actually works — claim age, withdrawal order, Medicare timing, tax optimization, the bucket structure — happen in the first ninety days of being retired, when half of them should have happened in the five years before. By the time most people sit down to think about it, the easy moves have closed off, the conversion window is shorter, and several decisions are baked in. Right? This article is the checklist to use the five-year window properly. Walk through it. Make the calls. The dollars and the peace of mind both compound.

Year 5 to Year 4 before retirement (roughly age 60-62 for many)

This is the "broad strokes" stage. Most decisions are still flexible. The work to do:

• Calculate your honest spending number. Sit down with twelve months of bank and credit-card statements. Produce two numbers: essential monthly spending and discretionary monthly spending. Without these numbers, no other planning works.
• Run a Social Security claiming projection with multiple scenarios — claim at 62, FRA, 70 — including spousal coordination. The "delay to 70" answer is right for most but not all. Cover this honestly.
• Estimate gross estate. Add up everything: home, retirement accounts, brokerage, life insurance, business interests. If you're anywhere near $2M in MA, the estate-tax conversation needs to start now.
• Inventory account types — taxable, tax-deferred, Roth. The proportions matter for the conversion-window strategy in years 4-1 before retirement.
• Audit your beneficiary designations. Five-minute review per account. (See the beneficiary audit article.)

Year 4 to Year 3 before retirement

The conversion window opens here for people who have stopped W-2 work but haven't started Social Security. Even if you're still working, several moves are worth making:

• Begin Roth conversion strategy. If you've stopped earning, this is the highest-impact tax move in retirement planning. Even small annual conversions starting now compound into meaningful lifetime savings.
• Build cash reserves toward Bucket 1. Get to 12-24 months of spending in cash and short-term savings before retirement starts. Funded gradually over these years rather than scrambled at the last minute.
• Address debt that won't be paid off by retirement. The mortgage is fine if it'll be gone in three years. The car loan is fine if it's manageable. The HELOC at 8% is not fine. Pay it down.
• Consider LTC insurance or hybrid LTC products. Underwriting is easier in your early sixties than your late sixties. If LTC insurance is part of your plan, secure it now.
• If you're going to downsize the home, scout the market. Don't try to sell at the same time you're navigating a hundred other transitions. Plan the move on its own timeline.

Year 3 to Year 2 before retirement

This is when the moves get specific. The framework you've built in years 5-3 starts producing concrete decisions:

• Lock in the retirement date. Tentative is fine; concrete is better. The date affects HR transitions, severance/pension elections, healthcare bridge planning, and Social Security paperwork.
• Plan healthcare bridge to 65. If you retire before 65, how are you covered? COBRA (expensive, time-limited), spouse's plan, ACA marketplace, retiree health benefits if available. The cost of pre-65 health coverage is one of the biggest hidden expenses in early retirement.
• Increase Roth conversions. Years 3-1 before retirement are when conversions get most aggressive — your income is dropping toward zero, your bracket headroom is largest, the IRMAA two-year look-back hasn't kicked in yet.
• Build Bucket 2 (the income floor). Five to ten years of essential expenses in bond ladders, MYGAs, or similar. This bucket needs to be in place before retirement, not started after.
• Document everything. Beneficiary designations, account list, key contacts (attorney, CPA, advisor, doctors), passwords (with proper security), medical wishes, end-of-life preferences. Your spouse should know where everything is.

Year 2 to Year 1 before retirement

Now the planning gets logistical. The big strategic decisions are largely made; execution is the focus:

• Test-drive your retirement budget. Live on your projected post-retirement spending for a quarter or two while still working. Surplus goes to savings; this surfaces budget surprises while you still have W-2 income.
• Confirm Medicare enrollment timing. If you're approaching 65, the Initial Enrollment Period planning starts now. If you're working past 65 with employer coverage, confirm creditable-coverage status.
• Coordinate Social Security claim with spouse. Specific dates, specific paperwork.
• Review estate documents. Wills, trusts, powers of attorney, health care proxies. Update anything stale. If you don't have these documents, get them.
• Plan the first 12 months of withdrawals. Specifically — what do you sell from, in what order, in month 1? Most retirees can't answer that question, but they should be able to.

The final year — the operational checklist

Year 1 is execution. The planning should already be done. The work that remains is bureaucratic — and there's a lot of it:

• File for Social Security on the appropriate timeline (online application is fastest)
• Enroll in Medicare during your IEP or as appropriate to your employer-coverage situation
• Make pension elections if applicable (lump sum vs. annuity, survivor options)
• Roll 401(k) to IRA if appropriate (improves investment options, simplifies RMD aggregation)
• Set up automatic distributions from Bucket 1 and Bucket 2 to your checking account
• Update tax withholding on Social Security and pension distributions to avoid underpayment penalties
• Notify HR of retirement date, coordinate any retiree benefits enrollment
• Update insurance — auto, home, umbrella — to reflect new lifestyle and any address changes
• Plan a transition celebration. Forty years of work earned a party. Don't skip it.

The five biggest mistakes I see in the pre-retirement window

Patterns from years of seminar audiences and one-on-one consultations:

• Waiting until 90 days before retirement to start planning. The Roth conversion window is largely missed. The estate tax exposure isn't addressed. The Medicare strategy is rushed.
• Underestimating spending. "We'll spend less in retirement" is the assumption. Reality often shows up at 110% of pre-retirement spending in the first few years (travel, hobbies, helping kids/grandkids), then declines.
• Failing to build the income floor before retirement. Retirees who hit retirement day without 12 months of cash and 5+ years of bond/MYGA buffer are exposed to sequence risk from day one.
• Claiming Social Security too early without running the math. The default of "sixty-two if I can" is usually wrong for married couples with reasonable longevity.
• Treating estate planning as something to do "in your seventies." Estate planning belongs in your sixties, before any health event makes it harder.

The Sherpa frame, applied

The Sherpa frame I use at every Retirement 101 seminar applies as well to the pre-retirement window as to the rest of retirement. The danger isn't on the way up the mountain. It's on the descent. The five years before you retire are the last five years of the climb — when you can still make adjustments without being mid-descent. Use them.

The retirees who walk into year one of retirement with a written plan, a built-out bucket structure, a clear Social Security strategy, current estate documents, and a Medicare enrollment plan tend to look back at retirement five years later as a clean transition. The retirees who didn't tend to spend years one through three retroactively building what should have been built in advance — at higher cost, with sequence risk active, often with health changes that complicate the planning.

The good news: every item in this checklist is doable. None require special expertise on your side; what they require is intentional time. We help build the plan as part of a written-plan consultation. Sleep at night, knowing year one of retirement starts with the framework already in place.

The bottom line

The five years before retirement are the most consequential planning window in your financial life. Big decisions are still possible. Bigger mistakes are still avoidable. The checklist above isn't exotic — it's just a sequence of intentional moves spread over the five-year window. Don't walk into retirement. Plan into it. Sleep at night, knowing year one of retirement starts with the structure already built.