Ten years before retirement can feel like an awkward point in the journey.
Retirement is close enough that you can begin to picture it, but still far enough away that it may not feel urgent. That can actually make this one of the most valuable periods in your retirement planning.
With ten years remaining, you still have time to make meaningful changes. You can increase savings, reposition investments, reduce debt, build tax flexibility, rethink when to claim Social Security, and begin deciding what you actually want retirement to look like.
The goal at this stage isn't to have every answer, it is to make sure you are headed in the right direction while you still have plenty of time to adjust.
1. Start With the Retirement You Want — Not Just a Retirement Number
One of the first questions people ask is: “How much money do I need to retire?”
That is an important question, but it may not be the best place to start, but instead, ask: “What do I want my retirement to look like?”
· Will you stay in your current home?
· Move somewhere warmer?
· Travel extensively?
· Maintain a second home?
· Help children or grandchildren?
· Work part-time?
· Retire completely?
The difference between two retirement lifestyles can easily amount to tens of thousands of dollars a year. Before deciding whether you have “enough,” you need some idea of what you are trying to fund. Ten years out is an ideal time to begin turning retirement from an abstract idea into something more tangible.
2. Find Out Whether You're Actually on Track
You don't need a perfectly accurate 30-year retirement projection yet, but you should have a reasonable understanding of where your current path is taking you. That means looking at:
· Current retirement savings
· Annual contributions
· Employer contributions
· Expected pensions
· Social Security estimates
· Other investments
· Expected retirement spending
· Debt
· Housing plans
· Inflation
· A reasonable range of investment returns
The important question isn't simply: “How much have I saved?”
It is: “If I continue doing what I'm doing now, where am I likely to be in ten years?”
If the answer looks good, you gain confidence. If there is a gap, ten years gives you something extremely valuable: time.
A modest adjustment today may prevent the need for a much larger adjustment five or eight years from now.
3. Make the Next 10 Years Your Strongest Saving Years
For many households, the decade before retirement can be their highest-income and highest-savings period.
The mortgage may be lower or nearly gone. Children may be financially independent. College expenses may be behind you. And earnings may be near their career peak.
That creates opportunity.
Rather than allowing newly available cash flow to simply turn into higher spending, consider redirecting some of it toward retirement. Increasing retirement contributions by even a few hundred dollars per month can make a meaningful difference over ten years, and as you reach the age where additional catch-up contributions are allowed, retirement plans may provide even more opportunity to accelerate savings.
The final decade before retirement isn't just about investment growth, it is also about how much you can still add.
4. Don't Automatically Put Every New Dollar Into the Same Tax Bucket
Many people reach their 50s with most of their retirement savings in traditional 401(k)s and IRAs. That may have made sense while they were working, but retirement can create an entirely different tax environment.
Withdrawals from traditional retirement accounts generally create taxable income. Later, required minimum distributions can force additional taxable income whether you need the money or not. That income can affect other areas of retirement planning, including Medicare premiums.
Ten years before retirement may be a good time to begin thinking about tax diversification, not simply investment diversification.
That could mean building a combination of:
· Traditional tax-deferred retirement accounts
· Roth accounts
· Taxable investments
· Cash reserves
The objective isn't necessarily to pay the least tax this year.
It is to give your future retired self more choices.
5. Begin Thinking About Roth Opportunities Before Retirement
For some people, the best Roth conversion years occur after they retire but before Social Security and required minimum distributions begin, but you don't have to wait until retirement to start planning for them.
Ten years out, you can begin asking:
· How large could my IRA and 401(k) balances become?
· Will I have a lower-income period after retirement?
· When might I claim Social Security?
· Could future required distributions push me into higher tax brackets?
· Should I be contributing some money to Roth accounts now?
A good Roth strategy often isn't a single transaction, it is a multi-year tax plan, and the earlier you begin looking ahead, the more years you may have available to execute it.
6. Get Serious About Debt
Not every mortgage needs to be paid off before retirement and borrowing isn't automatically bad.
But debt that feels manageable while you're earning a paycheck can feel very different once that paycheck stops. Ten years out is a good time to inventory your debt and ask: Which payments do I want following me into retirement?
High-interest credit cards and consumer debt should usually be priorities, a low-rate mortgage may be different. The objective isn't necessarily to enter retirement completely debt-free. It is to intentionally decide how much of your future retirement income you want committed to required monthly payments.
7. Look at Your Investments Through a Retirement Lens
While you're working, your portfolio has one primary job: Grow.
As retirement approaches, it gains another job: Help support your spending.
That doesn't mean becoming overly conservative ten years before retirement. You may still have a retirement horizon of 30 years or more, but this is a good time to begin thinking beyond a simple accumulation portfolio.
Eventually, you will need a strategy for:
· Producing retirement income
· Funding near-term spending
· Managing market downturns
· Rebalancing
· Taking withdrawals
· Coordinating taxable and tax-deferred accounts
The investment strategy that helped you accumulate money doesn't automatically become the best strategy for distributing it.
8. Start Learning Your Social Security Options
You don't have to decide when to claim Social Security ten years in advance, but you should begin understanding how it works.
For many retirees, Social Security is one of their largest lifetime retirement assets and the difference between claiming early and delaying benefits can be substantial. For married couples, the decision may also affect survivor income for many years.
Rather than automatically assuming you'll claim at 62, 65, 67, or 70, begin viewing Social Security as part of your overall retirement-income strategy. Your eventual claiming decision should be coordinated with your investments, taxes, pensions, longevity expectations, and spending needs.
9. Think About Healthcare Before Medicare
People retiring at 65 or later generally transition into Medicare.
Those retiring earlier may face a very different challenge: How will you pay for health insurance between retirement and Medicare eligibility?
For someone hoping to retire at 60 or 62, healthcare may be one of the biggest expenses standing between them and retirement. That doesn't necessarily mean early retirement isn't possible, it means healthcare needs to be part of the plan rather than an afterthought.
Because health insurance costs can be connected to taxable income, investment and tax decisions may matter more than people realize.
10. Decide What You Want Your Last Decade of Work to Look Like
Retirement planning isn't only about preparing for the day you stop working. It can also help you make better decisions during the years leading up to it.
Maybe you want to retire at 65, but perhaps the plan shows that at 62 you could afford to work four days a week, or change careers, or stop chasing promotions, or take more vacations, or spend more time with family.
Financial independence doesn't always arrive on one specific retirement date, sometimes it arrives gradually.
Good planning can help you recognize when work becomes optional before you actually stop working.
Ten Years Is a Long Time — If You Use It
A lot can happen financially in ten years.
· Investments can grow.
· Debts can disappear.
· Savings can increase.
· Tax strategies can be implemented.
· Homes can be paid down or sold.
· Careers can change.
· Retirement dates can move.
· Plans can evolve.
The important thing isn't predicting exactly what your life will look like ten years from now, it is making sure today's decisions are expanding your future choices rather than limiting them.
If retirement is about ten years away, you probably don't need every detail figured out yet, but this is a very good time to begin asking the right questions.
Because the greatest advantage you have ten years before retirement isn't necessarily your investment return. It's time.
Frequently Asked Questions
How much money should I have saved 10 years before retirement?
There is no single savings number that works for everyone. The amount you need depends on your retirement age, expected spending, Social Security, pensions, debt, housing plans, taxes, and other income sources. Ten years before retirement, the better question is whether your current savings and contribution rate are likely to support the retirement lifestyle you want.
What should I be doing financially if I want to retire in 10 years?
Start by estimating your future retirement spending and comparing it with your expected income from Social Security, pensions, investments, and other sources. This is also a good time to increase savings, reduce unnecessary debt, review your investment strategy, build tax diversification, and begin thinking about healthcare and Social Security decisions.
Is 10 years enough time to catch up if I am behind on retirement savings?
Often, yes. Ten years can provide meaningful time to increase contributions, take advantage of catch-up contributions, reduce spending, delay retirement if necessary, improve tax efficiency, or adjust your retirement goals. The earlier you identify a shortfall, the more options you generally have to address it.
Should I use Roth or traditional 401(k) contributions as I get closer to retirement?
The answer depends on your current tax rate and what you expect your tax situation to look like in retirement. Traditional contributions may reduce taxes today, while Roth contributions can provide tax-free income later. Many people approaching retirement benefit from having money in both types of accounts so they have more flexibility when managing taxable income in retirement.
Should I pay off my mortgage before I retire?
Not necessarily. Paying off a mortgage can reduce monthly expenses and provide peace of mind, but using a large amount of savings to eliminate a low-interest mortgage may not always be the best financial decision. The right choice depends on your interest rate, available assets, cash flow, taxes, and how much liquidity you want to maintain in retirement.
How should my investments change 10 years before retirement?
Ten years before retirement, your portfolio may still need meaningful growth, but you should begin thinking about how those investments will eventually support withdrawals. Rather than making a sudden shift to conservative investments, the goal is usually to gradually balance growth, income needs, market risk, and the amount of money you may need in the first several years of retirement.
What are the biggest retirement planning mistakes people make in their 50s?
Common mistakes include waiting too long to create a retirement income plan, underestimating future spending, carrying unnecessary debt, saving too little during peak earning years, keeping too much money in one tax type of account, ignoring healthcare costs, and making Social Security decisions without considering the broader financial plan.
How can I reduce taxes in retirement if most of my money is in a 401(k) or IRA?
Potential strategies include making Roth contributions before retirement, completing Roth conversions during lower-income years, managing the timing of withdrawals, coordinating Social Security with IRA distributions, and building taxable or Roth savings for additional flexibility. The best approach is usually a multi-year tax strategy rather than waiting until required minimum distributions begin.
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Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty.
Roth IRA:
Converting from a traditional IRA to a Roth IRA is a taxable event.
A Roth IRA offers tax free withdrawals on taxable contributions.
To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first-time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.