Planning to retire in the next 10 years? Do these 6 things first

Your 50s are a pivotal age. Your children may be heading into adulthood, your career is in full swing and that long-awaited dream of retirement is on the horizon. But between the soccer games, work deadlines and your ever-growing to-do list, planning for retirement can easily get pushed aside.

However, taking charge of your retirement future now is an investment that really pays off. The next 10 years are a prime opportunity to solidify your financial footing and ensure a smooth transition after you stop working. 

In this guide, we’ll explore key strategies to help you prepare for retirement in the next 10 years, including maximizing your retirement savings, navigating Social Security benefits and making smart financial decisions that set you up for success. 

Do these 6 things if you want to retire in the next 10 years

Planning for retirement can feel overwhelming. It’s easy to understand why some people shove it to the back burner, hoping it will magically resolve itself.

But here’s the truth: Taking charge of your retirement can be empowering, not frightening. By breaking down the planning process into manageable chunks and focusing on achievable goals, you can chip away at it, one step at a time.  

Here’s how to get started. 

1. Map out your retirement goals

First things first, you need to get a clear understanding of what your ideal retirement looks like. With less than 10 years until you exit the workforce, it’s crucial to move from simply dreaming about retirement to actively planning for it.

Do you envision lazy days by the pool, traveling the world or pursuing a creative passion? Be specific. Will you relocate to a new state or stay put? How much will your desired lifestyle cost? Write down your goals, big and small. The more specific you are, the easier it will be to translate them into a workable plan. 

This isn’t just about all the fun things you want to do, though — you should consider your health goals and possibilities as well. Do you plan to stay active? Is long-term care probable? Factoring in potential health care needs and costs is also important.

Ten years may seem like a long time, but it passes quickly, so taking the time now to map out your goals will ensure a smooth transition later. 

2. Create a retirement budget

Once you know your retirement goals, it’s time to do some number crunching. Create a realistic monthly budget for your desired retirement lifestyle. Research the average cost of living in your chosen location, including housing, groceries, health care and hobbies. Don’t forget to factor in inflation.

As you create your budget, it’s helpful to categorize your expenses into “needs,” like housing and groceries, and “wants,” like travel and entertainment. 

Here are other factors to keep in mind as you plan your retirement budget: 

• Map out your sources of income: First, account for all income sources you’ll have access to in retirement. Social Security will likely be your biggest contributor. You can estimate your income by using this online benefits calculator from Social Security. Your other retirement savings, including your 401(k), individual retirement account (IRA), annuity and a pension from your employer (if you have one) will also play a role. Don’t forget to consider any income you expect to earn from rental properties or a part-time job.
• Track your current expenses: Before you can create a retirement budget, you need to understand your current spending habits. Track your expenses for a few months to get a clear picture of where your money goes. Many budgeting apps and online tools can help with this process. Categorize your expenses into essentials like housing, food and transportation, as well as discretionary spending on entertainment, dining out and hobbies.
• Account for changes in spending: Your expenses will likely shift in retirement. Housing costs may decrease if you downsize, pay off your mortgage or relocate to a lower cost-of-living area. On the other hand, health care expenses increase with age. Factor in potential medical costs, including insurance premiums and any anticipated long-term care needs. Don’t forget to account for inflation, which will erode the purchasing power of your savings over time. A conservative estimate for inflation is around 3 percent annually.

Remember, your retirement budget is a living document. Review and adjust it periodically to account for lifestyle changes and unexpected expenses.

3. Take advantage of retirement account catch-up contributions

Here’s some good news if you need to catch up on your retirement savings: The closer you get to the big day, the more you can contribute to your retirement accounts.  

Many employers offer 401(k) plans that come with “catch-up contributions” for those ages 50 and older. This allows you to invest an additional amount on top of the standard contribution limit. In 2024, you can contribute up to $23,000 to a 401(k) plan each year, along with an additional $7,500 catch-up contribution for those age 50 and older. 

IRAs also offer catch-up contributions. In 2024, you can contribute up to $7,000 to a traditional or Roth IRA, along with a $1,000 catch-up contribution. 

Maximizing these contributions can significantly boost your retirement nest egg and set you up nicely for the future. 

4. Determine when to start Social Security 

Social Security benefits are a foundational source of income for most retirees. However, the age you start collecting these benefits impacts the amount you receive.  

You can begin collecting Social Security as early as age 62, but your monthly benefit will be permanently reduced if you do so. Waiting until your full retirement age (67 for those born in 1960 or later) nets you your full monthly benefit. If you can afford to wait even longer, delaying benefits until age 70 maximizes your benefits and results in an even higher monthly payout.

Consider your financial situation, health and retirement goals when deciding when to tap into Social Security. A financial advisor can help you navigate this decision.

5. Consult with a financial advisor 

A qualified financial advisor can be a valuable resource as you plan for retirement. They can assess your current financial situation, review your investments and create a personalized plan. A good advisor will help you find ways to maximize your savings, minimize taxes, establish a withdrawal strategy and manage risk.

While there are fees associated with financial advisors, the long-term peace of mind and potential for increased savings often outweighs the cost. Look for a fee-only fiduciary who will work in your best interest, not on commission by selling products that may not align with your goals.

6. Pay down debt 

Debt payments can significantly drain your retirement savings and leave you strapped for cash. That’s why it’s best to unload as much debt as possible before exiting the workforce.  

Prioritize paying down high-interest debt like credit cards and personal loans first. Consider strategies like the debt snowball or debt avalanche method to accelerate your debt payoff. You can use a debt paydown calculator to estimate how long it will take to eliminate multiple sources of debt, given specific interest rates and monthly payments. 

The sooner you’re debt-free, the more money you can allocate to retirement savings and investments.

Remember, your mortgage is technically debt, but it often comes with a lower interest rate than other forms of debt. Same goes for student loans. Evaluate your specific situation to determine if prioritizing mortgage paydown or student loan debt makes sense for your overall retirement plan.

Bottom line 

Retiring in the next 10 years is an achievable goal with focused planning and smart financial decisions. By setting clear goals, creating a budget, maximizing retirement contributions and prioritizing debt payoff, you can create a roadmap to a secure and fulfilling retirement. Remember, it’s a marathon, not a sprint. Start taking steps today, and watch your retirement dreams turn into a reality.