Five years from retirement? Now is the time to consider ramping up your efforts. This critical window gives you time to clarify your goals, assess your finances, maximize benefits, and cut high-interest debt.
Here are 5 ideas to set yourself up for long-term success.
1. Clarify your retirement goals and income needs
First, the fun part. Start by picturing your ideal retirement.
- Where do you want to live?
- How will you spend your time?
- What activities will bring meaning to your life?
“Talk with friends and family for insights and ideas,” says Fidelity Investments vice president and financial consultant Ryan Viktorin, CFP, stressing the importance of preparing both emotionally and financially.
“I ask clients to think about what they learned from retirement through their parents' eyes,” she adds. “How did they see their parents experience this time in their life?”
It’s time to run the numbers once you’ve defined your retirement vision
“Get a sense of what that lifestyle will cost,” says Viktorin. “Then look at what your income sources are, such as a pension, Social Security, annuities, dividends, and interest.”
Having a clear income plan is one of the most important steps to feeling confident about retiring. Fidelity suggests using 3 building blocks:
- Guaranteed income (annuities,1 Social Security, or pensions) for essential expenses
- Growth potential to help your money last
- Flexibility to adjust when needed
Using sources of guaranteed income to cover essential expenses can help ensure necessities like housing, health care, transportation, and food are taken care of.
Savings and retirement accounts can help you pay for nonessential expenses and invest for growth potential. This approach gives you flexibility to scale back withdrawals if the market stumbles.
Assistance from a financial professional can be helpful in planning your retirement income, Viktorin notes.
By doing the math 5 years before you call it quits, you’ll have time to make any needed adjustments, such as scaling back on spending, ramping up savings, or finding ways to boost your income, like negotiating for a raise or taking on a side gig.
And here’s a potential upside to doing this due diligence: You might discover that you’re in better shape than you thought. “Maybe you can retire early,” says Viktorin.
Tip: Be sure to consider health insurance as well. If you do retire before age 65 when Medicare eligibility begins, health insurance coverage could be an added expense.
2. Do a trial run of your desired retirement lifestyle
Before you commit, try living the retirement life you’ve imagined—and stick to the budget you’ll actually have. This is where reality meets planning.
Why it matters: It’s easy to picture your dream retirement but living on that income for a few weeks can reveal surprises. What happens if a home repair pops up during the test period or you want to eat out 2 nights in a row every week? Can your budget handle it—or will you need to make trade-offs?
How to do it:
- Stay local: If you plan to remain in your current area, do a staycation. Live only on the income you expect in retirement—no dipping into extra funds.
- Thinking of moving? If you have your sights set on living somewhere else, book a stay in your desired area and do a practice run there, says Viktorin. Skip the tourist splurges. Take public transportation, shop at grocery stores, and stick to your retirement budget.
This exercise gives you a clear picture of whether your dream lifestyle fits your retirement budget—and where you might need to adjust.
3. Capitalize on tax-advantaged accounts
This is your last chance to take advantage of valuable tax-deferred contributions to accounts like a 401(k) or 403(b) to bolster your retirement income.
“Try to max out retirement plans,” says Viktorin. “And don’t forget about the catch-up.”
Those catch-ups can help supercharge your savings strategy. If you’re 50 or older, you can contribute an extra $7,500 to a 401(k) on top of the standard $23,500 limit in 2025 ($24,500 in 2026) if your plan allows it, for a total of $31,000. Those between the ages of 60 and 63 can be eligible to add $11,250 in enhanced catch-up contributions in 2025 for a maximum of $34,750. (In 2026, the enhanced catch-up contribution amount will be $11,500 for a maximum contribution of $36,00.)
Starting in 2026, catch-up contributions must be made to a Roth account in after-tax dollars for people earning $145,000 or more from the same employer the previous year. That amount will be indexed for inflation in future years.
Consider an HSA if you have an HDHP
If you’re enrolled in a high-deductible health plan (HDHP), a health savings account (HSA) can be a powerful tool. HSAs offer a triple-tax advantage:2
- Contributions are tax-free.
- Any investment growth is tax-free.
- Withdrawals for qualified medical expenses are tax-free at the federal level.
How to make the most of it: If you can afford to, consider paying current medical costs out of pocket and leave your HSA funds invested. This gives your money the chance for tax-free growth potential for future expenses—even in retirement.3
Tip: Save your receipts. You can reimburse yourself later, at any time, for qualified expenses incurred after you opened the HSA.
Read Fidelity Viewpoints: 5 ways HSAs can help with your retirement
4. Make the most of all employer-provided perks
The breadth of your employer-sponsored benefits may go well beyond access to a retirement savings account or health insurance. Before you leave the workforce, try to take advantage of all the benefits your employer offers.
- Maximize your match: Contribute enough to get the full company match on retirement accounts—it’s like free money.
- Use health benefits: Schedule dental, vision, or elective procedures while you’re still covered.
- Tap extra benefits: Check for legal and estate planning services, long-term care options, or insurance discounts.
- Don’t waste paid time off: If unused time is paid out, consider banking those days to boost your savings.
5. Tackle big expenses while you are still working
Paying off high-interest debt, such as credit card balances, can be a top priority in the run-up to retirement, says Viktorin, as those costs can take a serious bite out of your budget.
“Credit card debt should be eliminated, if possible,” she says, adding that if you’re carrying big balances and can’t pay them off before you retire, the hard truth is that you may need to extend your timeline until you get those bills under control.
Once high-interest debt is handled, consider paying for larger purchases—such as a kitchen renovation or replacing a furnace or roof—while you still have a steady income. Doing so allows you to handle those costs (and any surprise overruns), while you have money coming in, instead of raiding your retirement savings later in life.
Preparation and planning can pay off
Planning can help you create choices. Using your final working years to fine-tune your plan and maximize your resources can help set you up for success. You don’t have to do it alone—working with a financial professional can help you identify gaps, explore strategies, and stay on track. The sooner you start, the more flexibility and confidence you may have when it’s time to retire.