Most people think of retirement as something to focus on in their 50s at the earliest – more likely after 60, when decisions about Medicare and Social Security loom. But Gen Xers, age 35 to 44, are now the Americans most concerned about retirement, according to a 2012 Pew study. More than half (53%) reported that they are either ‘not too” or “not at all” confident that their income and assets will last through retirement.

Something else is at work, as well. Once thought of as a destination, retirement turns out to be more of a process – and it starts earlier than we thought. Remember a few years ago when scientists began to realize that the transition women experience at menopause actually starts a decade or so sooner, with subtle physical changes now known as perimenopause? (They’re finding similar transitions in men.) Retirement’s not so different. And peri-retirement is not a bad way to think about the changes that start as people head into their 40s and 50s. The term hasn't been widely used thus far, but turns up in a blog post by a television writer named Barbara Raab.

How to Tell You’re in Peri-Retirement

Members of the 35–44 generation are realizing that they need to look ahead sooner than they had thought. Many worry about playing catch-up after the hard economic times brought on by the financial crisis. Further, since many Gen Xers started families relatively late in life, “our kids will still be young as we’re heading into our 50s,” says Amanda Smith, 44, an emergency room doctor. Unlike their parents’ generation, they need to be thinking further ahead; they can’t afford to wait if they’re to be in decent shape later.

Peri-retirement is the time to think about next steps. You may decide to prioritize high earnings for the next decade to catch up on lost ground. Or you may feel an itch, and decide to look for a way to segue away from work that no longer completely absorbs you. Either way, it’s important to take the long view.

Sometimes life pushes you out of an old job, but you’re just as likely to be driving the changes yourself. Bob Clyatt trained as a computer programmer, studied innovation at the Massachusetts Institute of Technology in Cambridge, Mass., and became a successful high-tech entrepreneur – until he left all that at 42 to pursue art. He’d had a passion for it in his teens and 20s, and as he was working flat out starting and running one company, then another, he didn’t forget it. “I would get solace looking at art during those years,” says Clyatt, 55, author of "Work Less, Live More." “Having an [escape] plan had the flavor of a lifeline. ‘I’m working toward something,’ I would think. It gave me perspective.”

How do you make these years pay off – and set yourself up for the financial challenges of midlife and beyond? Not every financial move looks like one: Saving and investing are important, sure, but developing the skills and mindset to be nimble and versatile when it comes to income and outgo are also important tools in ensuring your financial security.

The earlier you start saving, the better. Investment advisor William J. Bernstein, author of "If You Can: How Millennials Can Get Rich Slowly," advises starting at 25, but if you didn't back then, start now. He suggests setting up an automatic savings plan and putting 15% of your income in three mutual funds: a U.S. stock market index fund, an international stock market index fund and a U.S. total bond market index fund. Let the power of compound interest motivate you. "I created a multiyear spreadsheet showing the effects of compounding,” says Clyatt. “The model was powerful visually. I’d take it out and see how my savings were growing.”

Use an online calculator to try out your own scenarios.Say you invest just $150/month starting at age 35. By 60 (with an average 5% return), you’ll end up with $89,326 – $45,000 of that your own deposits, the rest – almost another $45,000 – interest earned. Start at 50 and invest the same $45,000 over the next 10 years (you’ll have to cough up $375/month), and you’ll have just $58,321 in total.

Stay flexible, without losing focus. Of course, life can interrupt the best of plans. When Smith went on a prolonged maternity leave after giving birth to twin boys – children number two and three for her and her wife, Melissa Cook, a court attorney – Cook had to put her deferred contribution on hold for a year. “There were some night sweats about our cash flow,” says Smith. Now that Smith is back at work, they’re both contributing again to their company plans.

“Saving can be tougher when you’re self-employed,” says independent television series producer Cecile Bouchardeau, 45. She and her husband Scott Weiland, a creative director who works on staff, had a son three years ago, so they need to think about college, too. “I’ve worked as a freelancer my entire career so I’m confident I know how to survive,” she says. “Still, saving takes more discipline than simply designating an amount to take out of your paycheck, which your employer matches.” She has SEP and Roth IRAs she’s funded, while Weiland contributes to his company’s 401(k).

Think flexibility on the income side, too. Timo Lindman, 45, an architect with his own practice and his wife, Sarah, 43, a television executive, are busy raising two young kids, with Sarah taking on the major breadwinner role. But they’ve talked about switching at some point. “It’s something of a tradition in architecture to hit your stride in your 60s,” says Timo, “so if I work into my 70s, we’d be supplementing our savings with my continuing source of income."

Take advantage of the time you have to get moving in the right direction. The good news is that when you’re in your 30s and 40s, you still have time to recover from setbacks, slowly rebuilding investments and recouping real-estate equity if you were hit badly by the 2008 crash. You're moving into your peak earning years – maybe this is the moment you decide to work flat-out to maximize your income and build up your nest egg. On the other hand, if you don't want to wait for that encore career and want – or find yourself – working part-time or starting a micro-business, it’ll be a lot easier if you can act on a plan. Either way, spreadsheet your income, expenses and overhead; think about your must-haves and could-do-withouts. Find places to park those peak earnings or start making adjustments to buy yourself the freedom to explore.

Spend less than you earn and less than your peers. Easier said than done, of course, but this the other side of saving, says Clyatt. With our consumer culture, this can be hard to sustain, especially if splurges feel like just rewards for working so hard. One tactic: “Come up with your own narrative,” says Clyatt. “One that says, 'I’m spending on the stuff that’s important to me; I’m saving for the experience that will be meaningful for me,' whether it’s a deeper sense of community or doing work you love.” Not spending may also help “build an attitude that will serve you well in later life,” points out Lindman. “Not needing to have new things, collecting experiences rather than objects and therefore actually not comparing yourself to your peers.”

Keep passions and interests outside of your main career alive across a lifetime. It’s easy to get a laser focus on your career job, but pastimes and passionate interests nurtured in your 30s and 40s can be a kind of income insurance for your 50s, providing the building blocks of meaningful encore careers. Foreign correspondent Steve Hindy, founder of Brooklyn Brewery, was a home brewer before he turned his avocation into a thriving business. To provide alternative streams of income to supplement savings, you may eventually want to take your corporate savvy to a cause you care deeply about – starting a nonprofit, for example, or working for one.

Test-drive new occupations while you’re still in your career-track job. Smith has reduced her clinical hours and added in teaching. With three young children, she needs to maximize her income, so “I’ve taken steps to avoid burnout and protect my career longevity,” she says. “Teaching is rejuvenating, not just because I have fewer hours on my feet in the ER, but I see these young, optimistic students who remind me why I went into this in the first place.” Teaching may also open up other options for her later on. Learning vacations and volunteering are other ways to get a reality check on a new direction you’re considering. Is running a B&B really as fun as it sounds? Find out from someone who’s been there, done that. PivotPlanet, for instance, will connect you with a restaurateur or a winery owner or a horse-breeder for hourly consulting sessions about the nitty-gritty of their fields.

Use vacations to try out new locations, making connections you can build on later. Your financial plan may include moving to a less costly place to allow you to do the work you love. Or you may want a different cultural life. Or warmer weather. Ten years ago Pam and Steve Ferrari started renting for a few weeks each summer in the North Fork of Long Island, an area they loved for its charm and the nearby ocean and farms. “Originally, I thought I wanted to be surrounded by open land,” says Steve. “Then we spent time in [the small town of] Greenport. I discovered how much I liked the ease of being able to walk to places.” Two years ago they bought a house there, which they use on weekends and plan to make their permanent home in a few years. The long transition is letting them put down roots. “We’re surrounded by fun, interesting neighbors,” says Pam, “and our boys can just jump off the train or Jitney and walk to our place.”

The Bottom Line:

Use peri-retirement, a transition period long before actual retirement, to set the stage for a thriving later life: Give yourself as many financial options as possible, not only by saving, but by nurturing an open, flexible, exploratory approach to life that may open up new income streams. As Steve Jobs put it: “Stay hungry, stay foolish…and live your own life, not someone else’s.” Keep your eye on the prize.

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