What to Do When Retirement Is 10 Years Away

When people are looking to the horizon and seeing retirement at the crest of the hill, they want to know the answer to one question: What should I be doing to be ready? The answer depends on where you are in your retirement planning.

Market chaos, inflation, your future—work with a pro to navigate this stuff.

If you’re 10 years away from retirement, there are things to do if you’re on track and different actions to take if you’re behind. And depending on your age, there are some things you need to be doing no matter how much money you have in your nest egg.

Things to Do if You’re on Track for Retirement

Congratulations! All that hard work, focus and dedication are paying off! With your dream in sight, make sure you take these actions to guard that retirement dream.

1. Sharpen your retirement budget. 

Sit down with your spouse or a friend and create a mock retirement budget using your current monthly budget. Some expenses will go down (dry cleaning, commuting costs and your clothing budget, for example), but other items may go up, like utilities and medical expenses. Be sure to add in a little extra for inflation—about 3% a year.

2. Be on guard against lifestyle creep.

This decade can be tricky. You can see your goal in sight, so it’s easy to let off the gas a little and reward yourself for your hard work. If you hear yourself saying the words “I deserve . . .”, you’re treading on thin ice. After all, you’re one fancy vacation or impulsive speedboat purchase away from derailing your retirement plans.

Get out of that territory—you’re close to letting lifestyle creep kill your momentum. Stay focused on your retirement dream and don’t let anything get in the way.

3. Take advantage of the catch-up option.

At age 50, you can start making additional catch-up contributions to your 401(k), Roth IRA and other tax-advantaged retirement accounts. Don’t miss out on this opportunity! Throw as much as you can into your investments. A decade of supercharging your savings will pay off in the long run.

Now, keep reading on. There are more action steps below that you might want to consider even though you’re in a good spot—and some you need to do in your 50s no matter what. Knowing that ahead of time puts you at the front of the pack.

Things to Do if You’re Behind on Your Retirement

Take a deep breath. You may not be where you want to be, but there’s still hope. You have the opportunity to shore up your retirement fund and put yourself in a better financial position. But we have to be honest: You need to get cracking!

1. Get out of debt and build up your emergency fund. 

If you haven’t paid off all your consumer debt, you need to get rid of your debts quickly! Debt payments will drain your retirement fund quicker than streaming a movie on your cell phone will eat up your data plan. If necessary, take a second job. Sell everything that doesn’t breathe and cut your budget to the bone. Debt is that destructive—it’s time to get it out of your life.

But don’t stop there. Once you’re out of debt, you need to create a buffer between you and life—that’s what an emergency fund is for. Make sure you have 3–6 months’ worth of expenses in a savings account. That way, the next time your car breaks down or your air conditioner suddenly decides to stop working in the middle of July, it won’t fully derail your financial comeback plan.

2. Make investing your top priority. 

Once you’re out of debt and have a fully funded emergency fund, throw everything you can into your investment fund. Take advantage of catch-up contributions the IRS allows for those 50 and above, like we talked about earlier.

If you’ve maxed out your 401(k) and IRA and still have money to invest, open up a brokerage account and use it to invest in low-turnover mutual funds.

3. Think about relocating. 

Some areas of the country are expensive to live in! If you’re behind on saving for retirement, evaluate the pros and cons of living in another region or state. You might even want to live there during retirement for the lower cost of living.

4. Downsize your home.

We know your home holds a lifetime of memories with those you love. But those memories won’t pay the heating bill in 10 or 20 years. If you’re seriously behind on saving for retirement, you might need to consider downsizing to a smaller home and putting the profit in your retirement fund.

5. Work longer.

To have a successful retirement, you may need to keep working longer than you’d planned. That’s okay. Lots of people are choosing a longer career. If a few extra years on the job means a solid and secure retirement, then the payoff will be worth the extra work.

Some of these decisions will pull at your heartstrings. We get that. But consider the long-term benefits. Making serious sacrifices now could literally save your retirement later.

Things You Need to Do No Matter What

If you’re 10 years or so from retirement, chances are you’re in your 50s. If that’s the case, there are some specific steps you need to take no matter how much money you have in your retirement account.

1. Check in with your dream team. 

By now, you need to have your dream team in place—that group of professionals who are helping you grow and protect your wealth and your legacy. Now’s a good time to check in with them and answer a few questions.

• Do you need to update your estate plan? (When was the last time you looked at your will?)
• Do you fully understand the tax implications of withdrawing money from your investment accounts? (Some accounts require you to withdraw a certain amount each year once you reach a certain age.)
• Do you need to drop or add new types of insurance? (You might be self-insured in terms of life insurance, but you probably need to add long-term care insurance.)

2. Learn about and (eventually) sign up for Medicare. 

Medicare is a confusing program (hello, it’s from the government), so being informed is crucial! If you turn 65 in the next 10 years, it’s time to start learning about it.

There are some rules about sign-ups around your 65th birthday, so pay attention to those. And be sure to get in touch with a licensed Medicare advisor before you start the enrollment process.

3. Check into your Social Security benefits. 

The Social Security Administration has an online tool that estimates how much money you’ll get each month when you apply for Social Security retirement benefits.¹

This number may change a little, but knowing the amount is helpful when planning a monthly budget. Remember, though, this money is icing on the cake. Don’t rely on it as your sole source of income in retirement.

4. Research long-term care (LTC) insurance. 

Getting LTC insurance is nonnegotiable. It helps pay for the cost of assisted living, nursing home care, in-home care and some other associated costs that come with long-term care.

With people living longer, you’ll probably need LTC insurance at some point. Use this decade to find a policy that meets your needs. The premiums go up the older you get, so sign up at age 60.

Your retirement is in sight. Your plan is in place. Take advantage of the next 10 years to make supersonic progress to reach your financial goals. Don’t let up on the gas. Keep charging ahead. Cross the finish line knowing you did everything possible to build a secure future. You can do it!

This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros.