Retirement Planning Checklist: What to Check 5 Years Before You Retire

Five years is enough time to fix small problems before they turn into big ones. We've put the ten items in roughly the order we'd tackle them, starting with a list of every account you own and ending with a rough retirement budget.

Why five years, and not one?

A lot of retirement decisions are hard to undo. The day you stop working, the paycheck stops, the workplace plan contributions stop, and in many cases your employer health coverage goes with them.

Five years gives you room to save more, pay down debt, and shift your investments slowly instead of in a panic. It's also close enough that your estimates start to mean something. If we had to pick two items to do first, it'd be health coverage before Medicare and a real Social Security estimate, since those two shape your budget more than almost anything else.

Take it at your own pace, since nobody does this in a weekend.

1. Write down every account

You can't plan around money you've forgotten about. For each account, note where it's held, the rough balance, and whether it's pre-tax, Roth, or taxable.

• Current and old 401(k), 403(b), or 457(b) plans
• Traditional and Roth IRAs
• Pensions, including ones from jobs you left decades ago
• Bank savings accounts, CDs, and taxable brokerage accounts
• Health savings accounts (HSAs)
• Any annuities or cash-value life insurance

If you've lost track of an old plan, which happens constantly, contact the former employer or its plan administrator. The Department of Labor also runs a Retirement Savings Lost and Found database that can track down some old accounts.

2. Get your Social Security estimate

Sign in to (or create) your "my Social Security" account at ssa.gov. It shows your estimated benefit at different claiming ages, built from your actual earnings record.

While you're in there, scan your earnings history. Missing years can shrink your benefit, and errors are far easier to fix now, while you can still lay hands on old W-2s and pay stubs, than they'll be a decade from now.

• You can claim as early as 62, but the monthly benefit is permanently reduced.
• If you were born in 1960 or later, full retirement age is 67.
• Waiting past full retirement age, up to 70, raises your monthly check.

When to claim is your call, and it hinges on things only you know: your health, how much you've saved, whether you're married, and how long people in your family tend to live.

3. Solve health coverage before Medicare

Medicare starts at 65. Retire earlier and you'll need another way to cover health costs, which is often one of the biggest bills in early retirement, and bigger than a lot of people expect when they first run the numbers on a napkin.

Picture yourself at 60, aiming to stop work at 63: that's two years of premiums, deductibles, and copays with no employer picking up part of the tab, and you'll want to know that number before you hand in notice. Your options:

• COBRA, which keeps you on your employer's plan for a limited time, commonly 18 months. Unless your old employer chips in, you'll pay the full premium yourself.
• A spouse's employer plan, if there is one.
• The Health Insurance Marketplace at HealthCare.gov or your state's exchange. Premium help depends on your income.
• Retiree health coverage from your employer, if it's offered.

Get real quotes before you set a date. Then put your Medicare enrollment window on the calendar: the initial enrollment period covers the three months before, the month of, and the three months after your 65th birthday month. Sign up late and you can face penalties that last.

4. Max out catch-up contributions

Once you turn 50, the IRS lets you put extra money into retirement accounts each year, above the normal limit. These are catch-up contributions, and we think anyone who can afford them should use them.

• Workplace plans like 401(k)s, 403(b)s, and governmental 457(b)s allow a catch-up amount on top of the regular limit.
• IRAs allow a smaller catch-up.
• Ages 60 to 63: Under SECURE 2.0, workplace plans can offer a higher catch-up limit in the years you turn 60, 61, 62, or 63. At 64, you drop back to the regular catch-up amount.

The dollar figures change most years, so check the current ones on the IRS page for catch-up contributions. And ask your plan whether it offers the higher age 60 to 63 limit; not every plan does.

5. Build a cash cushion

One common approach: hold enough cash to cover one to two years of the spending your other income won't cover. Some people are fine with less, especially if a pension or Social Security already covers most of the basics. The point is to avoid being forced to sell investments at a bad moment just to pay the electric bill.

Where should it sit? A high-yield savings account, a money market fund, or short-term CDs all work, and building the pile bit by bit over five years, a little from each paycheck while you still have one, is a lot easier than trying to find it all at once in your final year. Our guide on what a market drop near retirement means shows why this cushion matters so much.

6. Look hard at your debt

Debt payments are fixed costs, and they don't shrink when the paycheck stops. List what you owe, the interest rate, and the payoff date for each.

• High-interest credit card debt comes first, because nothing in a normal investment portfolio reliably earns more than a credit card charges, and every dollar you pay off stops costing you that rate.
• A car loan that runs past your retirement date deserves a second look.
• Whether to pay off a mortgage early turns on its rate, your taxes, and how much cash you'd rather keep on hand.

7. Review your investment mix

Your asset allocation is the split between stocks, bonds, and cash, and it matters a lot. Plenty of people ease toward a mix that swings less as retirement gets close. How far to go is up to you.

Ask yourself:

• How would I feel if my savings dropped 20% or more the year before I retire?
• Am I holding a big chunk of my employer's stock?
• Do I know what each fund I own actually holds, and what it costs?
• Is my money spread across different kinds of assets, or piled into one?

At this stage some people add bonds, cash, or a modest amount of gold. If gold's the one you're curious about, read how a gold IRA works and when it isn't a fit first, then try the quiz below.

8. Update your beneficiaries

Retirement accounts go to whoever's named on the beneficiary form, not to whoever's named in your will. Out-of-date forms can send an account to the wrong person, an ex-spouse included.

Check every single one. Log in to each account, or call the provider, and confirm:

• A primary beneficiary is named, plus a contingent (backup) one.
• Names reflect marriages, divorces, births, and deaths.
• Percentages add up to 100%.

One more wrinkle: with many workplace plans, your spouse has rights to the account unless they sign a written waiver.

9. Think about consolidating old accounts

It's a mess to track. Five accounts at five companies make it harder to see the whole picture and to plan withdrawals later. Combining old 401(k)s and IRAs tidies that up.

But compare fees and features before you move anything, because some old plans are very cheap. Leaving a plan can also cost you the "rule of 55," which lets people who leave a job at 55 or later take penalty-free withdrawals from that employer's plan. Our guide to your four choices for an old 401(k) lays out the trade-offs. If you do move money, use a direct method, as explained in rollover vs. transfer.

10. Sketch a rough retirement budget

This is the big one: estimate your monthly spending in retirement. Start with what you spend now and adjust: commuting might drop, while health care and travel might climb.

Then do the math by lining that up against expected income from Social Security, any pension, and withdrawals from savings. The gap is what your savings have to cover, and if it's big, five years is time enough to save more, plan on working a little longer, or rethink the plan.

How to keep at it

Do one or two items a month and write down what you find. Come back to the list once a year until you retire, because your numbers will change and so will the rules. If things get complicated, a fee-only financial planner or tax professional can review your plan, and you can check any adviser's background for free through FINRA BrokerCheck or the SEC's adviser search on Investor.gov.

Common questions

Who qualifies for the higher catch-up contribution at ages 60 to 63?

Anyone who turns 60, 61, 62, or 63 during the year, if their workplace plan offers it. It's for workplace plans such as 401(k)s, not IRAs. Check the current dollar limit on IRS.gov.

Should I move all my investments to cash before I retire?

We wouldn't. Retirement can last 25 years or more, and cash might not keep pace with inflation over that stretch. A more common setup is some cash for near-term needs and the rest invested in a mix you can live with.

Do I have to sign up for Medicare at 65 if I'm still working?

That depends on your employer coverage and the size of your employer. Some people can delay certain parts without penalty. Check the rules at Medicare.gov or with Social Security before your 65th birthday.

Is it a good idea to combine all my old retirement accounts?

It simplifies things more often than not, but not always. Compare fees, investment options, and the rule of 55 first. Our 401(k) options guide goes through it.

We base our guides on primary sources such as the IRS, the Department of Labor, and federal regulators. Read our editorial policy. Spot an error? Tell us.