Retirement Readiness:
One-to-Five Years from Retirement

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With five or fewer years to go, retirement looks like a more serious proposition than it used to. Facing one of life’s most important transitions is no longer something you will do someday, but something that will be happening almost before you know it.

There will be ramifications for how you live your life, your relationships with other people, perhaps for where you live, how you view yourself and your future, your physical and mental health, and, of course, your finances. In this last category alone, you will have to make some of the most complex decisions you have ever faced, most of them with significant consequences for your long-term prosperity and even solvency.

Fortunately, you still have time to evaluate and prepare. There is plenty of help for you, and these pages will enable you to find it.

1. What do you want your life to be like when you’re retired?

When most people look ahead to their retirement, they usually ponder how they can have a good, happy, “successful” retirement, and whether they will be able to afford it.

These issues are more closely related than may appear at first. So are a variety of other questions that you might or might not think of right away, or that might appear not to be connected. Your life is going to be changing, but it is still your life, which means that many kinds of things will affect you, and just as importantly, they will affect one another.

For example: will you move when you retire? Whether you do or not, that decision has direct effects on your finances and your quality of life. It will also affect your relationships with other people, especially if you move any distance, or if your closest friends and family either really like or really dislike where you live. Your location also affects what activities you pursue in retirement. Distance from recreational facilities and from doctors may affect your health. Pleasant surroundings may benefit your mental and spiritual well-being, and cramped, noisy, or high-traffic surroundings may create stress and unhappiness. And those are just the more obvious, direct effects.

The same could be said about most other choices you make in the next several years. Each area of your life affects each other area. So instead of thinking of these decisions as isolated choices, it is best to think of them as part of the whole person that is you, or for that matter, of your whole household.

That sounds big, and it is. A successful retirement is not any easier than a successful career. But as we break it down into pieces, it becomes simpler to grasp. And it is not too early to start doing that, if you haven't already.

One way to look at your retirement life is with what we call the SPLASH model. This model divides all the key issues and concerns in your life into six categories, with the most fundamental ones at the bottom, and the less concrete (but arguably the most important ones) at the top. Here is what the model looks like, and a few of the key issues that relate to each area.

Spirit: What matters beyond the physical details of your life
Purpose: Activities that give meaning to your daily life
Love: Your connections to others you care about
Avocation: What else gives you joy and satisfaction
Security: Providing financial and physical shelter
Health: Taking care of your physical and mental well-being

    Spirit: What matters beyond the physical details of your life
  • What is the meaning of life, and of your particular life?
  • How do you connect with whatever religious, spiritual, or other reality you believe in?
  • Are you prepared to deal with aging and death, in yourself and those you care about?
    Purpose: Activities that give meaning to your daily life
  • Should you be doing paid or volunteer work in retirement?
  • How do you engage productively and satisfyingly with your community, the nation, or the world at large?
  • What legacy do you want to leave behind?
    Love: Your connections to others you care about
  • How to make the most of your marriage (or relationship with another kind of life partner or significant other)
  • How do you develop and maintain solid relationships with other family and friends?
  • How do you manage when care-giving is required?
    Avocation: What else gives you joy and satisfaction
  • What leisure activities make sense for you now?
  • What opportunities should you take to continue to improve and exercise your mind?
  • How do you maintain your lifestyle as you age, and as you become less physically or mentally adept?
    Security: Providing financial and physical shelter
  • What financial decisions need to be made to assure you of continued means to live as you wish?
  • Where and in what kind of domicile should you live, and how do you maintain it as you get older?
  • What legal or financial steps should you take to prepare for incapacity or death?
    Health: Taking care of your physical and mental well-being
  • What should you be doing in the way of exercise, nutrition, and sleep?
  • What medical professionals should you consult, and what kinds of medications or therapies should you be using?
  • What can you do to fight off harmful attitudes, feelings, and habits, and to promote happiness and wellbeing?

Click any of the six main topic areas Spirit, Purpose, Love, Avocation, Security, or Health – or better yet, try them each in turn, to explore in more detail the specifics of what each is, and why they all matter. As you may already realize, some of the items listed above could fit into more than one category. This is unavoidable: Life does not actually fit into neat boxes. The intention here is to cover all the key areas in one place or another, and as you visit each section, we will explain the main connections to the other sections.

2. Can you afford to retire when you want to, and still maintain your preferred lifestyle - and what decisions will help improve your financial position?

All of the issues in the previous section are important, but as we start getting closer to retirement, we usually want to be confident that, first and foremost, our financial security is reasonably assured. Once we have that settled, most of us tend to feel that we can figure out everything else.

This is a valid and even necessary approach for most people. Although you can’t make all of your financial decisions until you know, for example, where you’re going to live and what you’re going to do and how much money you’ll make (or spend) as you shift into retirement, you also can’t make those decisions until you have a sense of your overall financial situation. So we have the makings of a vicious circle.

The best way to break out of this is to use a detailed model to see what your current financial situation is, how it might play out into the future, and then how all this would change depending on what other decisions you make.

This sounds tricky – and it could be tricky indeed. But fortunately, there is an excellent planning tool available that does just this job, and it has been specifically built for people in your situation. It may take you two or three hours to work through it, possibly even more, but that's because it's thorough, not because it's difficult (or, if you are still four or five years from retirement, you could probably get by for now with the software's faster input mode, which generally cuts the time in about half). If you are the person in your family who handles the finances, this is something you can do yourself, yet it is better than what all but the most expensive personal financial planners can do for you.

3. What steps should you be taking as you begin to move closer to your target retirement age?

Five Years before retirement

Three Years before retirement

Two Years before retirement

One Year before retirement