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3 Key Steps to Take Within 5 Years of Retirement

3 Key Steps to Take Within 5 Years of Retirement

| July 17, 2021

The countdown is on if you’re planning to retire within the next five years. And, while it can feel like time is standing still—especially when you’re still at work—this time period will move quickly as you busy yourself with planning, preparing, and anticipating the freedom of retirement. 

Now’s the time to determine if you’re on track, build a cash reserve, and educate yourself on the ins and outs of retirement. Here’s everything you need to know: 

Determine If You’re on Track

Do you have a magic number you want to hit before retiring? And how far are you from this goal? 

It’s good to have a savings target—and this number should be personal and specific to your needs. By now, you’ve probably accounted for your future monthly expenses, the funds you’ll need to cover the fun things you plan to do in retirement, and large expenses like long-term care, if needed. But, has anything changed in your life situation? If so, you may need to make adjustments. 

In the next couple of years, you might also want to try living on your planned retirement budget to see if it’s realistic and to catch any costs you may have overlooked. 

You can also play a little defense during this time period. Knocking out a loan or bumping up your savings over the next few years can help ease the strain on your budget. Stay motivated by creating a countdown. Retirement is the light at the end of the tunnel—how rewarding!

Build a Cash Reserve

For many people, large portions of their retirement funds are in tax-advantaged retirement accounts or other investments. Since you’re likely not to cash out your funds on retirement day, it would be a good idea to build an easily accessible cash reserve to help cover unexpected  costs or offset a downturn in the economy. A good goal to have is one year’s worth of expenses in cash. 

You can, of course, stash away extra funds to build a bigger safety net. Most people generate their highest annual income in the years leading up to retirement. You might want to consider using the time you have and the extra money to increase your IRA contributions or make catch-up contributions.  

The current IRA and Roth IRA annual contribution limit is $6,000, but those 50 and older can contribute an extra $1,000 annually. (1) Added contributions into a retirement account will also lower your income at tax time. By doing this, you’ll be saving on taxes and increasing your retirement savings!

Educate Yourself and Plan Accordingly

All of those important retirement-related ages and dates are coming up, so take note and consider your options—and if you’ll face any coverage gaps or tax implications. 

For example, you can begin withdrawing Social Security benefits at age 62, but the longer you wait, the higher your monthly payment will be (with a cap at age 70). Can you afford to wait a few more years? If you haven’t used it already, give the online calculator a try.

Also noteworthy: Medicare eligibility begins at age 65 for most. (2) But it’s a good idea to sign up for Medicare in the months leading up to your 65th birthday to hit your Initial Enrollment Period and avoid coverage gaps or added costs. (3) And, if you plan to retire early, you face a gap in coverage. You may be able to stay on your employer's plan through retirement benefits or COBRA, (4) but check with your benefits coordinator as fee structures vary. Purchasing your own health coverage is also an option, but, for many, the high cost is a deterrent to retiring early.

We’re Here to Help

You’ve surely heard the advice to take on greater risk as a young investor, and then transition to a more conservative portfolio as you near retirement. But, even in retirement, you may be planning for another 20 to 30 years, and you want your retirement portfolio to continue to have the potential to grow and support you. Many people also hope there will be funds left to pass on to the next generation. For a deeper dive into this topic, download our free eBook, Retire Happy: A Simple Guide to Your Next Big Adventure.

And remember, it’s normal to have questions related to your retirement timeline and investing decisions. At T.A. Holland & Co., we combine our financial expertise and compassion for you, your goals, and your dreams to create a customized financial plan. Reach out to us at or (617) 523-5656 to schedule a complimentary appointment so we can get to know each other.

About T.A. Holland & Co.

T.A. Holland & Co. was founded in Boston, Massachusetts, in 1920, and serves individuals and businesses throughout the country. We provide cutting-edge financial services with a broad array of solutions to help our clients grow and preserve their wealth. We have seen good and bad economic times. Through it all, T.A. Holland & Co. has thrived by always making the customer our #1 priority. We get to know you and understand your needs so we can provide you with the proper guidance and strategies. Our senior vice president, John Hellmuth, has been at the helm of T.A. Holland’s financial services since 1990, but he doesn’t do this job alone. He is joined by his two children, Lindsay Hellmuth and Thomas Hellmuth. As CERTIFIED FINANCIAL PLANNER™ practitioners, our financial services team has the knowledge and experience to help you solve your most pressing financial challenges. To learn more about how we can help you, visit our website and reach out to us at (617) 523-5656 to schedule a complimentary get-acquainted meeting.

About John

John M. Hellmuth is senior vice president of T.A. Holland & Co.’s financial services division, where he has been at the helm since 1990. A graduate of Boston University, John joined the firm of Moseley Hallgarten Estabrook & Weeden in 1982. In 1985, John was appointed head of the trust services department of Shearson Lehman Brothers. John is a CERTIFIED FINANCIAL PLANNER™ practitioner and holds the Chartered Financial Consultant® (ChFC®) designation from The American College of Financial Services. John is passionate about providing cutting-edge financial services with a broad array of solutions to help his clients grow and preserve their wealth. To learn more about John, connect with him on LinkedIn.