What Should You Do If You're 3–5 Years From Retirement?

This is often when we get calls: "I want to retire in 3 years but am not sure if I can or not. Can you help me?"

A little preparation today can save you a lot of stress as that day gets closer. Here’s what we recommend focusing on during this critical 3–5 year window.

1️⃣ Talk to an Expert

This seems obvious, but many people try to go it alone and end up making avoidable mistakes. We often hear things like:

“Financial advisors are too expensive.”

“I don’t have enough money to work with an advisor.”

Truth is, at Alpha Financial, we offer the first two meetings free of charge for prospects—regardless of asset size.

So… what’s your excuse now?

2️⃣ Track Your Spending (If You’re Not Already)

How can you tell if your retirement savings are enough if you don’t know how much you’ll need each year? Start with a baseline—your spending won’t be identical year to year, but you need a ballpark figure.

• Locked-in expenses: mortgage, car payments

• Flexible expenses: vacations, dining out

  
  

Consider any major one-time expenses that may still be on the horizon:

• New house or renovations

• Kids’ college tuition or weddings

• Big health-related expenses

• Dream purchases (yes, the classic dream car counts)

  
  

3️⃣ Understand Your Healthcare Coverage

Healthcare is one of the biggest retirement expenses. Knowing your options ahead of time is key. Depending on your age and work history, you may have access to:

• Medicare (when eligible)

• Retiree coverage from a previous employer

• Tricare or Federal Employee Health Benefits (FEHB)

• COBRA

• Affordable Care Act (ACA) plans

  
  

4️⃣ Plan Your Retirement Paycheck

Where will your income come from once you stop working? Common sources include:

• Bank cash reserves

• Pension payments (paperwork often takes time, start early!)

• Portfolio withdrawals (brokerage accounts or IRAs)

• Annuities

• Rental or business income

• Social Security

  
  

Your income sources may change over time, especially if you have multiple accounts or businesses. Mapping this out now helps you prepare for transitions later.

5️⃣ Figure Out How You’ll Pay Taxes

The only two certainties in life… right? Income in retirement means taxes.

• Most retirees have taxes withheld from Social Security, pensions, or IRA distributions.

• If that’s not enough, you may need estimated tax payments—another expense to budget for.

  
  

Planning ahead keeps you from facing unpleasant tax surprises.

6️⃣ Review Life Insurance Needs

Do you still need coverage for major expenses (mortgage, kids’ college, etc.) in case something happens to you? Consider:

• Converting group policies from work into individual policies

• Keeping or replacing current policies

• Setting this up ideally one year before retirement

  
  

7️⃣ Adjust Your Portfolio

Five years out is when we start “locking in” retirement income strategy. We typically want:

• 4 years of portfolio withdrawals in bonds as a buffer (“war chest”)

• At least 2 years in high-quality, short-term bonds or money market funds, so clients don’t need to sell stocks during a market downturn

  
  

Questions to address:

• Do you need to increase your bond allocation?

• Should adjustments be made in one lump sum or gradually?

  
  

This is all about making your portfolio resilient before you hit retirement.

✅ Final Thoughts

The 3–5 years before retirement are crucial. This is your chance to iron out any gaps, lock in your strategy, and head into retirement with confidence—not guesswork.