If you are roughly a decade away from your target retirement date—likely in your early to mid-50s—you are entering one of the most critical phases of your financial life.
Ten years gives you enough time to make a massive impact on your nest egg, but it is also close enough that you need to start shifting your strategy from “aggressive growth” to “protected wealth.”
Whether you are dreaming of traveling the world or simply want to relax at home, here are five actionable, informational steps you should take today to ensure a smooth transition into retirement.
1. Maximize Your Earning Potential
It is tempting to coast during your final decade of work, but this is actually the time to lean in. Growing your income now directly translates to a larger retirement fund.
Look for opportunities to take on new responsibilities, pivot to a higher-paying role, or invest in upskilling—especially keeping your technical skills current. By maximizing your earnings over the next 10 years, you give yourself the flexibility to save more aggressively. As a bonus, a higher income might even allow you to retire a year or two earlier than planned if your investments perform well.
2. Supercharge Your Retirement Savings
Once you hit age 50, the government gives you a powerful tool: “catch-up” contributions. If you have a 401(k) or an IRA, the contribution limits increase, allowing you to stash away thousands of extra dollars each year.
However, high-income earners should look even further. Investigate whether your employer allows after-tax 401(k) contributions, which can act as a gateway to a Roth IRA (often called a “Mega Backdoor Roth”).
A Quick Note on Roth vs. Traditional: Many people love Roth accounts because they offer tax-free withdrawals in retirement. However, because your 50s are often your peak earning years, you might be in a higher tax bracket now than you will be in retirement. In this scenario, contributing to a traditional tax-deferred account might actually save you more money upfront. It is highly recommended to speak with a tax professional to map out the best contribution strategy for your specific bracket.
Finally, do not forget about Health Savings Accounts (HSAs). If you have a high-deductible health plan, max out your HSA, pay for current medical expenses out-of-pocket, and let the HSA grow tax-free for decades to serve as a dedicated healthcare fund in retirement.
3. Start Building “Ballast” in Your Investment Portfolio
In your 20s and 30s, a 100% stock portfolio makes sense because you have decades to recover from market crashes. But as you enter your 50s, you need to start adding “ballast” (safer assets) to your portfolio to protect against market volatility.
A good rule of thumb at the 10-year mark is to aim for a roughly two-thirds stock and one-third bond/fixed-income allocation. You still need stocks for growth to combat inflation, but you need high-quality, short-to-intermediate-term bonds to act as a shock absorber.
Why does this matter? Retirement rarely goes exactly as planned. You might be forced to retire early due to an unexpected job loss, a health issue, or a family emergency. If your portfolio is entirely in stocks and the market crashes the year you are forced to retire, you will have to sell your investments at a massive loss. Having a safe “ballast” portion ensures you have cash to live on without destroying your long-term portfolio.
4. Take Your Retirement Lifestyle for a “Test Drive”
Retirement planning is not just about math; it is about psychology. Many people save millions of dollars only to realize they feel lost, lonely, or bored when they stop working.
Before you hand in your notice, take a “test run.” Use a week of your paid time off to stay at home and live exactly as you would in retirement.
- What does a Tuesday feel like with no meetings?
- If you are married, is 24/7 togetherness enjoyable, or is it too much?
- Do you want to travel, relocate to a warmer climate, or start a small hobby business?
You do not need a rigidly detailed budget at this stage, but you do need a vision. Knowing what you want your days to look like will help you and your financial advisor calculate exactly how much money you will actually need.
5. Formulate a Long-Term Care Strategy
One of the biggest threats to a retiree’s financial security is the high cost of extended medical care later in life. The 10-year mark is the absolute best time to address this—for one very specific reason: your health.
If you wait until your 60s to look into long-term care insurance, you run the risk of developing a health condition that makes you uninsurable, or makes the premiums unaffordably high. In your early 50s, you are much more likely to qualify for reasonable rates.
If you decide against traditional insurance, you still need a plan. High-net-worth individuals often choose to “self-insure” by creating a dedicated, separate investment bucket specifically earmarked for future caregiving. On the other end of the spectrum, it is important to understand how government programs like Medicaid work, as they are currently the largest payer of long-term care in the United States. Knowing where you stand now prevents stressful, rushed decisions later.
The Bottom Line
The decade before retirement is your golden window. By pushing for higher income, maximizing tax-advantaged savings, gradually reducing investment risk, testing out your future lifestyle, and planning for healthcare costs, you can transition from your career into your next chapter with total confidence.
Planning for retirement? Bookmark this page and share it with a friend who is also counting down the years!