Hey, today we’re going to talk about five things that you should do when you’re five years out from retirement. I’ve sort of done a little alliteration here, so bear with me. Number one, you need to identify your income. How much money is it going to take in retirement? I’ve even seen billboards that said, what’s your number? I’ve seen commercials that said, what’s your number? And they’re focusing, like a normal broker who focuses on accumulation, they’re focusing on how much money you have saved.

I’ve been doing this twenty-nine years. In retirement people need to be more focused on what they need for income on a monthly basis. What if you had three and a half million dollars, like a client I worked with recently? They had three and a half million dollars. You think they’re in really good shape. The problem was they needed $40,000 a month to survive and to pay all the bills of the things they’ve created, so it’s your income that you need that’s more important. How do you identify it? You first start by identifying the known to the unknown. What are you spending now and then from knowing what you’re spending now, you’re then able to calculate when I retire in 3, 4, 5 years, what am I going to be spending in retirement? Work from what you know you’re spending to what you then will project to suspend. Take off the things you won’t be spending on when you’re in retirement, but add on the things you will be spending for when you’re in retirement. Number one, know and identify your income.

The second thing you need to do when you’re five years out from retirement is do your best to diminish your debt. Okay? It’s so important that you understand that if you were running a race and you were about equal with everybody else in the race, but the guy who was the starter with the gun came by right before you started to run and said, wait a minute, you’re going to have to run with an extra 10 pounds, we’re going to put it on your back. Then you say, that wouldn’t be fair. Right. And it’s not fair sometime for you to enter into retirement without considering, especially if you’re five years out, what are the debts that we can get rid of? Credit card debt, home equity lines of credit, student loan debts that you might still be carrying, and even, yes, your mortgage, could you possibly maybe work another year to diminish your debt down as low as you can get it or possibly into zero? That will help you so much in retirement.

The third thing you need to do when you’re five years out or so for retirement is you need to reduce your risk. Most people that I’ve seen in twenty-nine years of doing this, they’ve got enough money to retire. All they need to do is not lose what they’ve got. I used to coach football. I think about a football team that’s three or four touchdowns ahead in the fourth quarter. A lot of people are that way financially, but they continue to take risk that they don’t need to take. Most people begin to plane down that risk. Much like if you were to fly somewhere, you know, the plane takes off. It’s going at a certain rate. It gets going faster and faster. It gets up high. It travels at five or 600 miles an hour for most of the time of the flight, but then when you get close to landing, you can feel that plane begin to slow down and to begin to lower its elevation. You need to make sure and consider reducing your risk when you get closer to retirement.

The fourth thing you need to do when you’re within five years of retirement is you need to tackle your taxes. By that, I mean we were coached and told put your money in a 401k. Put your money in an IRA and you don’t pay tax on it now. Now that we’re getting close to the end, we’re saying, wow, look at what’s in my 401k. Look at what’s in my IRA. And you’ve got to understand that’s not all your money. It’s a beast that you’ve created, and so what you are needing to look at when you get to be within four or 5, 3, 2 years from retirement, you need to start saying, how can I tackle those taxes and maybe begin to even allocate them now, put them, move them, pay a little bit more tax now so that I can begin to tackle it and bring down that beast so that it doesn’t kill me in retirement. Ed Slott, who’s known as America’s Authority on IRAs and 401ks has been quoted over and over as saying the single biggest factor that’ll separate you from your retirement dreams is your taxes.

What we’re talking about today is the five things you need to do when you’re within five years of retirement. First thing you need to do, we talked about you need to identify the income that you’re going to need in retirement. That’s your target every single month. That’ll determine whether what you’ve got saved is going to last or not. The second thing you need to do is diminish the debt load that you’re carrying. Take the weight off, run freely in retirement because you pay off your debt as much as you can. Third thing, you need to probably plane down your risk like a plane landing goes slower and slower, still touches the ground going pretty quickly, but it’s not nearly as fast as when it’s way up in the air. You’ve slowed down those risks. The fourth thing is you need to tackle your taxes and make sure you’ve got a grip on your taxes. The fifth thing I would say is let’s tie all of that together. Let’s polish the plan that we’ve had. A lot of people have accounts. They have a 401k account, an IRA account, a Roth account, a 403b account. Those are not retirement plans. You need an actual retirement plan that’s going to address income inflation, investments, taxes, healthcare, and legacy. That is a complete retirement plan, and you need to put a plan together with a professional who knows what they’re doing because they’ve done it with hundreds, yay, even thousands of people through the years, and you need to polish that plan. What do I mean by polish that plan? When you buy a brand new car, it’s already polished. It looks nice. It’ll probably never look that good again. But a year or two later, you begin to see that, hey, we need to put some polish on that thing. Make it look good again. Every single year in retirement, you polish the plan over and over again, not just the five years before you’re going to retire, really important that you do it then, but all the way through the retirement years, you need to polish your plan.

So to summarize the things you need to do when you’re within five years of retirement. Hey, you need to identify that income. You need to diminish the debt. You need to reduce your risk. You need to tackle your taxes, and you need to keep polishing your plan. If we can help you at Mosley Wealth Management, give us a call. We’ll be glad to help you in any way. You can also reach out via our website. If you like what you’ve heard, like us, subscribe to our youtube channel. Every week if you’ll give us eight to 10 minutes, I’ll do my best to increase your financial knowledge.