Approaching Retirement

Approaching Retirement: Steps to Take When You Have 10 Years or Less to Plan

The journey to retirement begins to take on a greater sense of importance during the final decade of your working years. That’s because the steps you take during the last 10 years of your career are critical to your ability to actually enjoy retirement—however you may choose to define that season of life.

A lot of major life events tend to occur during the late stages of your career. If you have children, they are likely launching their own careers and leaving the nest. Your own parents may be nearing the latter stages of their own retirement years. As a result, you may find yourself somewhere in the middle of all of those life changes wondering what your own retirement will look like while you continue to work hard and save as much as you possibly can.

In fact, the final decade of your career may seem like the time when you finally have the ability to make socking away money for retirement a top priority. But with retirement on the horizon, there are some important steps to take (other than saving as much as possible) to help make your transition a successful one.

Define What Your Ideal Retirement Looks Like

What do you look forward to doing the most during retirement? Will you stop working completely or do you plan to take a part-time job or start a business venture? There are no one-size-fits-all answers to these questions. Personalize your vision of retirement in a way that matches your values and life goals as you carefully consider what your ideal retirement looks like.

Run an Initial Budget Plan for Retirement

Reviewing your budget or personal spending plan is something most of us agree we should all be doing but is easier said than done. As retirement approaches, the budgeting process takes on a whole new level of significance.

Once you’ve identified where your money is going, you can try to free up some extra money to save and invest for retirement. You should also pay special attention to the areas of spending, like health care and travel, that will probably be increasing the most during your post-work years. And be sure to take inflation into account—about 3% a year.

See If Your Retirement Savings Will Be Enough

Your budget can help you determine whether you have saved enough for retirement. Review all of your potential retirement-income sources—401(k)s, IRAs, pension, and Social Security—and count on spending about 4% of your money each year you’re not working. That figure is more of a general guideline than a hard-and-fast rule, but it can help you see whether you’re on the right track.

Decide Where You Want to Live During Retirement

While asset allocation is an important factor in increasing your retirement savings, your retirement location is an important determinant of your overall life satisfaction and cost of living.

Think about where you plan to spend your retirement years. Maybe you will be downsizing your home or changing your location to be closer to family and friends.

There are many important quality of life factors to consider, such as accessibility and caliber of health care, affordability of housing, and opportunities to connect in a meaningful way with other residents.

Consider Future Health Care Costs

Obtaining affordable and reliable health insurance coverage during retirement should be a top priority for soon-to-be retirees. Not surprisingly, health-related costs can account for a significant portion of the budget during retirement—even for those who are on Medicare. According to the Kaiser Family Foundation, health-related costs represented 14% of household spending for those on Medicare in 2016. And they amounted to at least 20% of spending for almost 3 in 10 Medicare households that year.

One thing you can do to cover future health care costs is contribute money to a tax-advantaged health savings account (HSA) while you’re still working. If you are in a high-deductible health insurance plan that offers an HSA option, you and your employer can contribute a combined $4,550 to an individual plan HSA or $8,100 to a family plan HSA in 2020 if you are 50 or older. A high-deductible health plan is one for which the deductible is $1,400 for an individual or $2,800 for a family.

The original version of this article appeared at