The final years before retirement are not just about saving more—they are about turning decades of planning into a dependable income strategy.
For professionals in their late 50s and early 60s, retirement planning starts to feel different. After decades of saving and accumulating assets, the focus shifts toward distribution, income, and making the right decisions at the right time. New questions start to take center stage:
When should I claim Social Security?
How much income will I need each month?
Should I change the way I’m invested?
How much will healthcare cost?
If you are within five years of leaving full-time work, you are entering one of the most important financial windows of your life. It’s critical to have a plan. Here are the key areas to think through before you retire:
1. Lock Down Your Future Cash Flows
In your 20s, 30s, and even 40s, retirement projections are often educated estimates. By your late 50s or early 60s, those estimates should become much more concrete. Your first priority is to understand what income will show up, when it will start, and how dependable each source will be.
· Review Your Social Security Benefits. Go to www.ssa.gov/myaccount and create an account to login and view your benefit estimates. You’ll be able to determine how much income you can expect at various ages.
· Review Pension Benefits. If you have a pension from a current or former employer, request an updated estimate. Pay close attention to your payout choices, such as a single-life annuity, joint-and-survivor option, or lump-sum rollover. This is an important and irrevocable decision so you’ll want to evaluate all options and how they fit your personal circumstances.
· List other income sources. Do you have rental properties or farm income? Do you plan to work part-time in retirement?
2. Zero In On Your Expenses
Understanding what’s coming in is only half of the equation. Now is the time to really begin to understand how much your lifestyle costs.
- Know Your Outflows. Carefully track how much money you are spending each month on average. The number will vary, so spend 6 months to a year tracking these expenses and determine an average monthly outflow
- Determine which expenses are permanent vs. temporary. Do you have debts that will be paid off prior to or early in retirement that will reduce your monthly outlays?
- Don’t forget to include the fun stuff. You’re going to have unlimited time now to do the things you may have been putting off while you were working. Think about how much you’d like to spend on things like travel and experiences. This needs to be accounted for when projecting retirement income needs
3. Identify Your Income Gap & Allocate Appropriately
Now that you’ve got a better understanding of how much will be coming in vs going out, you should be able to identify the monthly deficit, if any, that you’ll be operating in.
If you identify $5,000 of monthly income sources, but you’ve determined your expenses in retirement are going to be $7,000, you know now that you need to come up with a plan to generate $2,000 of additional income from your investments. This critical piece of information will help you to determine an appropriate asset allocation strategy for your retirement savings.
- Create a Paycheck Bucket. Aim to keep 5 years of distributions stable and liquid. In the example above, you need $2,000 per month or $24,000 per year. I’d advise an Indy Wealth client to have $120,000 set aside within their portfolios to cover those first several years of retirement income needs. These dollars would be held in money markets, treasury notes, or ultra-short duration bond funds.
- Don’t Get Too Conservative. It is my personal belief that assets you plan to liquidate within 5 years should be risk-free. But funds not needed for 5+ years should remain invested for long term growth to fund future distributions and outpace inflation. The biggest risk to a 30 year retirement is not the periodic market downturn, it’s inflation. The best way to fight inflation is to remain invested for long-term growth through a diversified portfolio of equities.
4. Aggressively Use Catch-Up Contributions
The 55–65 window often overlaps with peak earning years. At the same time, major expenses such as raising children, paying for college, or paying down a mortgage may be easing. That combination can create one of your best final opportunities to strengthen retirement savings.
· Max out workplace plans where possible. If you are age 50 or older, catch-up rules may allow you to contribute more than the standard limit to plans such as a 401(k), 403(b), governmental 457 plan, or Thrift Savings Plan. For 2026, the IRS lists a standard employee contribution limit of $24,500 and a general age-50 catch-up limit of $8,000 for many of these plans. Notably, for those ages 60–63, SECURE 2.0 allows a 'super catch-up' limit of $11,250 for 2026, allowing you to supercharge your final savings years if your plan permits.
· Do not overlook IRAs. Traditional and Roth IRA limits also include catch-up amounts for eligible savers age 50 or older. Income limits, workplace plan coverage, and tax filing status can affect deductibility or Roth eligibility. But if you are eligible, you can put away an extra $1,100 per year into these vehicles once you eclipse the age of 50.
5. Build a Bridge to Medicare
Healthcare can be one of the biggest planning gaps for people who retire before age 65. If you leave work at 60, 62, or 64, you may need several years of coverage before Medicare begins. That bridge should be priced into your retirement plan before you give notice.
· Map your coverage options. Depending on your situation, the bridge may include COBRA, an Affordable Care Act marketplace plan, a spouse’s employer plan, retiree medical coverage, or private insurance.
· Model the premium impact. Health insurance premiums, deductibles, and out-of-pocket costs can materially change the retirement income number you need. Price your healthcare bridge as a monthly line item, not as an afterthought. If you are close to 65, begin reviewing Medicare Parts A, B, and D, along with Medigap and Medicare Advantage options, well before your enrollment window.
· Prepare for Medicare enrollment. Medicare’s Initial Enrollment Period generally lasts seven months: the three months before the month you turn 65, your birthday month, and the three months after. Missing key deadlines can create coverage gaps or late-enrollment penalties.
The Bottom Line
The five years before retirement are your opportunity to move from planning to execution. By clarifying your future income, identifying potential vulnerabilities, maximizing late-career savings opportunities and planning for healthcare, you can enter the next chapter with greater confidence.
At Indy Wealth Advisors, we help you turn these retirement questions into a clear plan built around your goals, lifestyle, and timeline. If you are approaching retirement, now is the time to identify gaps, make informed decisions, and move forward with confidence.
Contact us today to start building your retirement income plan.