The 5 Phases of Pre-Retirement

Retirement is one of the most important life events you will experience, and getting it right takes wise planning. With a sound intellectual framework and some assistance from a qualified professional, you can ensure that you are ready to retire when the day comes.

Retirement preparation can be broken down into five phases, with each phase having its own unique strategy. Regardless of which phase you currently fit into, make sure you have completed the tasks in the previous category before moving on to the next. Here are the key aspects to carry out during the five phases of retirement.

Phase 1: 30 Years Before Retirement 

Many people skip this step because retirement seems so far away, and with bills, a mortgage, and kids, saving for this distant period of life seems less important. However, the first step is usually the most important in any strategy, and retirement planning is certainly no exception. 

When you’re 30 years away from your planned commencement of retirement, you want to make sure you have some tax-advantaged accounts open and you’re contributing money to them annually. If your employer offers a company match, that’s a 100% return on your contributions. You’ll want to contribute the maximum to that account. An IRA will allow you to save even more every year, and it offers tax breaks like an employer’s plan. 

Phase 2: 20 Years Before Retirement

When you get to your 20-year milestone, be sure to review your retirement accounts and verify that you’re saving enough each month. You’ll want to figure the amount you’ll need when retirement starts and then calculate how much you need to save each month to reach that level. A financial professional comes in handy here. 

This phase is also a good time to start looking over other financial vehicles that could be of use during retirement. These include life insurance, disability insurance, and long-term care insurance. 

Phase 3: 10 Years Before Retirement

When you get to this phase, it’s time to consider catch-up contributions. These are additional retirement account contributions the IRS allows (starting at age 50). As with regular contributions, catch-up funds receive special tax treatment.

With a qualified estate lawyer or financial planner, you should draw up an estate plan, which will include a last will and testament. To circumvent probate, you can open transfer-on-death brokerage accounts and payable-on-death bank accounts. 

Phase three is also a good time to review your tax situation as it pertains to retirement planning. If you started saving money in the first stage with a traditional account, but now you’re making more money and you think you’ll continue making more money during retirement, you may want to consider switching to a Roth account, which allows for tax-free withdrawals.

Phase 4: 5 Years Before Retirement

In the fourth phase, you need to begin thinking about what you want out of retirement. It can help to create a list of your requirements and preferences. Requirements are “must-haves,” like monthly income for living comfortably. Preferences are aspirations that you would like to achieve but are lower on the list of priorities. This might include major vacations, building education savings accounts for grandchildren, or moving to a warmer climate.

Phase 5: 1 Year Before Retirement

When you are 1 year from retirement, you’ll want to review your current plan and make sure everything is ready. Do you have health insurance? If you’re going to lose health insurance from your employer, you’ll need to make sure you have signed up for Medicare or have some other alternative. 

Do you have enough savings in your retirement accounts? If not, consider delaying retirement for another year or two. While this may not be an ideal choice, it may be a way around an otherwise difficult problem. 

On a personal level, what will you do with your time in retirement?  Now is a good time to take a look at how you might expand on your hobbies, interests, recreation, and charitable endeavors. 

From beginning to end, the tax, legal, and financial aspects of retirement planning are complicated for just about anyone. If you need any assistance along the way, please contact us to see how we can help.

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As we head into 2022, Amelia, Amy, and I are thrilled and excited to announce the merger of Howell Financial Advisors with Total Wealth Planning, LLC, based in Cincinnati, OH. We are now the Carmel, IN office of Total Wealth Planning and our office remains at its current location.


I have known the Total Wealth Planning team and their principals for over 12 years, which means we chose the right partners. Total Wealth Planning shares our same personal and professional values as objective, Fee-Only fiduciaries. Our common purpose is to deliver exceptional wealth management and life planning experiences for our mutual clients.

Amelia, Amy, and I, along with the entire Total Wealth Planning team, look forward to continuing to guide you through complex financial decisions that can impact you, your lifestyle, and your family’s financial future. We could not be more pleased about this new chapter in the life of our firm, and also for you, the most valued members of our business.

Learn more about our new venture with Total Wealth Planning and how this will benefit you at:

As always, we are here for you.

We will see you in 2022!