What Should I Do in the 5 Years Before I Retire?
The five-year countdown to retirement works best in order: pin down your real spending and confirm your income covers it; solve healthcare — a bridge plan if you retire before 65, Medicare as you approach 65; decide Social Security timing (as early as 62, though waiting toward full retirement age or 70 raises the monthly amount); clear high-interest debt; and get the estate and emergency documents in place. Do the money and healthcare pieces first — they drive the rest. Each of these is far easier to steer now than to fix later.
Quick answer
In the five-year countdown to retirement, work through it in order: (1) pin down your real spending and confirm your income sources cover it; (2) solve healthcare — a bridge plan if you're retiring before 65, and Medicare enrollment as you approach 65; (3) decide Social Security timing (you can claim as early as 62, but waiting toward your full retirement age or 70 raises the monthly amount); (4) clear high-interest debt; and (5) get the estate and emergency documents in place. Do the money and healthcare pieces first — they drive everything else.
Why the five-year countdown matters
Retirement readiness isn't one decision — it's a short stack of them, and most are far cheaper to make well when you still have income coming in. The five-year runway is when you can still adjust your savings rate, test your real budget, fix a coverage gap before it costs you, and time the irreversible choices instead of defaulting into them. Work the list in order; the first two items decide most of the rest.
A planning guide, not financial advice
This checklist is a framework for organizing the decisions, not personalized financial, tax, or insurance advice. Dates and figures for Medicare and Social Security come from the primary sources below — verify your own situation with those agencies or a fee-only advisor before acting.
1. Pin down what you'll actually spend — then confirm the income covers it
Every other number depends on this one. Track your real spending for a few months, then sort it into essentials (housing, food, insurance, healthcare) and the flexible rest. Now line your expected income against it — Social Security, pensions, retirement account withdrawals, any part-time work. The gap between guaranteed income and essential spending is the single most important figure in your plan. If that gap comes out wider than you hoped, don't stop at the number — the best retirement books if you're behind compares what's worth reading when the answer is "not enough yet."
- Build the real budget, not the tidy one — include the irregular costs (property tax, car, home repairs, gifts).
- Map every income source and roughly when each turns on.
- Stress-test it: what happens in a bad market year, or if one spouse is on their own?
2. Solve healthcare — the piece that trips up early retirees
If you're retiring before 65, you are leaving employer coverage before Medicare begins — and that bridge is where a lot of plans wobble. Your main options are an Affordable Care Act marketplace plan (often with income-based subsidies), COBRA continuation of your old plan for a limited window, or coverage through a spouse. Our guide on health insurance before Medicare walks the trade-offs, and the subsidy calculator estimates your marketplace cost.
As you approach 65, Medicare has its own calendar. Your Initial Enrollment Period runs the seven months around your 65th birthday month, and missing it — without other qualifying coverage — can mean a lifelong Part B late-enrollment penalty. Put the date on the calendar now.
Two healthcare deadlines not to miss
Before 65: line up a bridge plan for the day employer coverage ends, so there's no gap. At 65: enroll in Medicare during your Initial Enrollment Period (the seven months around your birthday month) unless you have qualifying coverage from active employment — late Part B enrollment can carry a permanent penalty.
3. Decide when to take Social Security
You can start Social Security as early as 62, but the monthly amount grows the longer you wait — up to age 70. Your full retirement age is 67 if you were born in 1960 or later. Claiming early permanently reduces the monthly benefit; delaying past full retirement age increases it. The right answer depends on your health, your other income, your spouse's benefit, and whether you'll keep working — but the decision belongs on the pre-retirement list, not the retirement-day list.
If you're widowed or divorced, the rules have extra levers worth real money — our guide on Social Security when a spouse dies covers survivor timing.
4. Clear high-interest debt and right-size the big fixed costs
- Pay down credit cards and any high-interest loans before the paycheck stops — debt is far heavier on a fixed income.
- Decide the mortgage question deliberately (pay off, keep, or refinance) rather than by default.
- Look hard at the two costs that break retirement budgets: housing and transportation.
- Build a cash cushion so a bad market year doesn't force you to sell investments at the bottom.
5. Get the documents and the estate essentials in place
The paperwork is the part everyone postpones and no family ever regrets doing early. Before you retire, make sure the essentials exist and someone knows where they are: a will, a durable power of attorney, a healthcare directive, updated beneficiaries, and an emergency binder your spouse or family could actually use. Our estate planning checklist covers the documents, and what belongs in an emergency binder covers the day-to-day.
6. Plan the life, not just the money
The retirees who struggle are rarely the ones who ran out of money — they're the ones who ran out of purpose. In the countdown, give some thought to how you'll fill the days: the work you might keep, the people you'll see, the projects you've been deferring. Our guide on finding purpose in retirement and a retirement bucket list are good places to start.
Health coverage is the line item that decides whether your date actually works. Our comparison of health insurance books for early retirees covers ACA subsidies, COBRA math, and what each book leaves out.
You may be interested in…
Good to know
Common questions
How do I get health insurance if I retire before 65?
The Health Insurance Marketplace at HealthCare.gov is the main route, and losing job-based coverage qualifies you for a Special Enrollment Period — you can apply any time from 60 days before to 60 days after your separation date, without waiting for the annual open enrollment window (November 1–January 15). When you apply, you find out whether your income and household size qualify you for premium tax credits and lower out-of-pocket costs, or for Medicaid in your state. COBRA is the other option, generally lasting 18 months, though it usually costs far more per month than a subsidized Marketplace plan.
Do my 401(k) and IRA withdrawals count as income for a Marketplace subsidy?
Generally yes — HealthCare.gov says retirement account withdrawals count as income. That makes the size of your withdrawals in any pre-65 year a health insurance decision as much as a tax one: pulling an extra chunk from a traditional IRA can raise your income enough to shrink or erase the premium tax credit for that year. Model the withdrawal and the premium together before you take it, and check the tax consequence of the withdrawal itself at the same time.
I’m retiring at 66 and taking COBRA. Do I still have to sign up for Medicare Part B?
Yes — and this is one of the most expensive mistakes in the whole countdown. Medicare says COBRA and retiree plans aren’t considered coverage based on current employment, so they don’t extend anything: your 8-month Special Enrollment Period to sign up for Part B without a penalty starts when you stop working or the job-based coverage ends, whichever comes first. Miss it and you wait until the January 1–March 31 General Enrollment Period, coverage starts the month after you sign up, and you pay an extra 10% on your Part B premium for each full 12 months you could have enrolled — for life.
Should I keep contributing to my HSA if I’m retiring around 65?
Stop the contributions before you apply for Medicare — Medicare’s own guidance is to stop at least 6 months ahead. You can’t contribute to an HSA once you have Medicare, and if you sign up at 65 or older your Part A coverage can start up to 6 months retroactively, so contributions made in that overlap can trigger a tax penalty. The money already in the account is untouched: you can spend it on Medicare premiums, deductibles, copays and coinsurance after your coverage starts.
Do I have to claim Social Security as soon as I stop working?
No — retiring, enrolling in Medicare, and claiming Social Security are three separate decisions with three separate deadlines. You can claim as early as 62, but claiming before your full retirement age permanently reduces the monthly amount, and delaying past it (up to 70) raises it. Medicare enrollment at 65 is the one with a hard penalty attached; Social Security timing is a trade-off you can make on your own schedule.
Do I need estate documents if I don’t have much money?
Yes — the documents that matter most in the countdown have nothing to do with your net worth. A financial power of attorney and an advance directive decide who can act and speak for you while you’re alive and unable to, which is the situation that actually arrives for most people. A will handles what’s left afterward, however modest. Skipping them doesn’t save your family money; it costs them a court process.
What happens if I do nothing in the five years before I retire?
You don’t avoid the decisions — you just make them by default, at the worst possible moment. The retirement date arrives and the coverage bridge, the Social Security claim and the Medicare enrollment all get decided in whatever order the paperwork lands, with a Part B penalty and a permanently reduced benefit as the likely souvenirs. Nothing on the list is hard; every item on it just gets harder once the paycheck has already stopped.
Is it too late if I’m retiring next year, not in five?
No — the order matters more than the runway. Do the health coverage piece first, because it has hard federal deadlines: the Marketplace Special Enrollment Period is 60 days on either side of losing job-based coverage, and the Part B window is 8 months from when employment ends. Then confirm your real spending against your income, then decide Social Security timing, then the documents. A year is enough to do all four in that sequence.
Start getting retirement in order — one simple checklist at a time
Free quick-start checklists to help you organize the practical parts of retirement: what to gather, what to decide, and what to write down first.
- What to gather
- What to update
- What to share with family
Almost there — check your inbox.
We just sent a confirmation email. Click the link inside and your free download lands right after. (If you don't see it, check spam or promotions.)