One of the first steps you should take at this stage is avoid the pitfall many pre-retirees experienced in 2008 – overexposure to stocks. Sure, you'll want to keep a significant equity portion of your portfolio to boost potential gains, but you won't have as much time as younger workers to make up lost ground if the market sinks. A conservative rule of thumb is to keep a percentage of stocks equal to 100 minus your age. If you're 60 years old, that means keeping 40% of your investments in stocks and putting the rest in bonds or money market accounts. More aggressive investors will sometimes use "110 minus your age," instead.

With just five years to go in your full-time job, it's not too late to get a realistic retirement budget together. On the income side of the ledger, figure out how much you'll reasonably be able to count on from savings, Social Security and 401(k)s, and if you're lucky, a traditional pension plan. Then total your expenses. Factor in two of the biggest outlays anyone in their 50s or 60s should anticipate later in life: medical needs and long-term care.

While you may have paid into Medicare throughout your working years, it's still not free for most recipients. The Part B component typically costs about $100 a month, and if you want to boost your coverage, you could be paying significantly more than that for Medicare Advantage.

Even if you're in great health today, now is the time to be thinking about the considerable assisted living and nursing home costs that may lie ahead. For those with moderate net-worth, long-term care insurance is often a good idea, even so, it can cost several hundred dollars a month. There are several online tools that can help provide an estimate based on your age, the state you live in and other factors.

Creating a budget can help you make minor adjustments to your retirement plan that could make a big impact later. If you forecast a deficit, you may need to work a year or two longer, but at least you'll feel more secure in your golden years.

In reality, making decisions about where to put money and whether to buy insurance gets complicated. Often, it's a good idea to talk with a knowledgeable financial adviser who can help you understand your options and chart the best course forward. Even if a consultation costs a few hundred dollars or more, sound advice can help put you on solid footing for the next phase of your life and provide peace of mind.

Of course, even those who prepare diligently for retirement will occasionally need some additional income after their primary career is over. Maybe you're planning to work part-time in a different field. If so, start researching what you'll need to do ahead of time, whether it's getting a special certification or having some volunteer experience under your belt. When the day of retirement finally arrives, you'll be ready to embark on your new endeavor and develop an added revenue stream.

  1. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  2. Who can make catch-up contributions?

    Most common retirement plans such as 401(k) and 403(b) plans, as well as individual retirement accounts (IRAs) allow you ... Read Full Answer >>
  3. Can you have both a 401(k) and an IRA?

    Investors can have both a 401(k) and an individual retirement account (IRA) at the same time, and it is quite common to have ... Read Full Answer >>
  4. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  5. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  6. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
Related Articles
  1. Retirement

    Two Heads Are Better Than One With Your Finances

    We discuss the advantages of seeking professional help when it comes to managing our retirement account.
  2. Retirement

    5 Secrets You Didn’t Know About Traditional IRAs

    A traditional IRA gives you complete control over your contributions, and offers a nice complement to an employer-provided savings plan.
  3. Retirement

    Don’t Retire Early, Change Careers Instead

    Though dreamed of by many, for most, early retirement is not a viable option. Instead, consider a midlife career change.
  4. Retirement

    Using Your IRA to Invest in Property

    Explain how to use an IRA account to buy investment property.
  5. Retirement

    How a 401(k) Works After Retirement

    Find out how your 401(k) works after you retire, including when you are required to begin taking distributions and the tax impact of your withdrawals.
  6. Personal Finance

    How the Social Security Reboot May Affect You

    While there’s still potential for some “tweaking” around your Social Security retirement benefits, I’d like to share some insight on what we know now.
  7. Retirement

    Read This Before You Retire in the Philippines

    The Philippines has a warm climate, a low cost of living and plenty of people who speak English. What to do next if you think you want to retire there.
  8. Retirement

    4 Books Every Retiree Should Read

    Learn more about the current financial situations retirees are facing and discover four books that every prospective and current retiree must read.
  9. Retirement

    Are Fees Depleting Your Retirement Savings?  

    Each retirement account will have a fee associated with it. The key is to lower these fees as much as possible to maximize your return.
  10. Retirement

    Retirement Tips for Doctors

    Learn five tips that can help physicians get back on schedule in terms of making financial preparations they need to retire.
  1. Dynamic Updating

    A method of determining how much to withdraw from retirement ...
  2. Possibility Of Failure (POF) Rates

    The likelihood that a retiree will run out of money prematurely ...
  3. Safe Withdrawal Rate (SWR) Method

    A method to determine how much retirees can withdraw from their ...
  4. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  5. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  6. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...

You May Also Like

Trading Center