Top 8 Financial Decisions for the Decade Leading to Retirement

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You look forward to a happy and fulfilling retirement after years of working hard to provide for your family. For many people, retirement still feels distant—like a light growing brighter at the end of a long tunnel. Yet the final decade before retirement often passes more quickly than expected, making proactive planning essential.

Most Americans remain confident they will have enough savings for their post-work years, even after the COVID-19 crisis. However, relying solely on passive investment strategies is rarely sufficient. The decade leading up to retirement in 2026 is a critical window for getting your financial house in order.

Top 8 Financial Decisions

These eight practical steps will help you build a comfortable retirement by taking action now.

1. Plan your life

What does retirement actually look like for you? Are you planning to relocate to a warmer climate, travel extensively, volunteer for a favorite cause, or continue working part-time? Each lifestyle choice carries its own financial implications.

Without a clear vision of your future activities—such as annual trips to visit grandchildren—it is difficult to assess whether your savings plan will truly support your goals.

2. Identify your needs

Once you have defined your desired lifestyle, you can create a realistic budget. While predicting exact prices a decade ahead is impossible, regularly adjusting your projections helps ensure your goals remain achievable.

Not every expense needs to be itemized with perfect precision. A widely used starting point is to estimate retirement spending at about 80% of your current expenses.

This benchmark is not one-size-fits-all. A 50-year-old still supporting college-age children will have very different needs than a 60-year-old whose kids are financially independent. Review your personal situation carefully.

Healthcare deserves special attention. Even with Medicare and supplemental coverage available, the average couple can expect to spend $300,000 on healthcare during retirement (excluding long-term care costs such as nursing homes or assisted-living facilities).

Taxes also matter. Required minimum distributions from retirement accounts begin at age 72 and can push you into a higher tax bracket. Understanding your income flow throughout retirement helps you plan more effectively.

3. Flip your financial focus

Many people spend their peak earning years supporting their families, including children’s education and helping adult children who may still live at home. As retirement approaches, it is time to shift priority toward securing your own future.

You do not need to abandon your children, but ensuring your own retirement security must now take precedence.

4. Stability is what you should seek

The decade before retirement is generally not the time for major financial commitments. Large purchases such as a new home or vehicle can create new debt and disrupt your plans. Before making any significant decision, carefully evaluate its impact on your retirement timeline.

Some changes are unavoidable—health issues, natural events, or personal circumstances like divorce. Focus on controlling the variables you can influence.

5. Dispatch debt

Entering retirement with debt is rarely advisable, even when interest rates are low. Variable-rate obligations are especially risky on a fixed income. While certain strategies such as a reverse mortgage may make sense in specific situations, reducing debt should generally be a top priority in the years leading to retirement.

6. Increase savings

Building retirement savings remains essential. Take full advantage of catch-up contributions—currently an extra $6,500 per year to 401(k) plans and higher limits for IRAs. Compare these opportunities against your projected retirement budget to determine how much more you need to save.

7. Insulate investments

As you near retirement, shifting toward a more conservative portfolio helps protect your income from market volatility. Many financial planners recommend the “120 minus your age” guideline: at age 60, this suggests keeping 60% in growth assets such as stocks and the remaining 40% in fixed-income investments.

This balanced approach aims to preserve capital while still allowing modest growth.

8. Predict the unpredicted

Even the most thorough plans can be disrupted by unexpected events. Maintain an emergency fund covering at least six months of living expenses in liquid assets—some experts recommend a full year’s worth.

Review your estate plan to ensure it addresses scenarios such as the loss of a spouse. Thoughtful preparation today will help you enjoy the retirement you have worked so hard to achieve.

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