The years just before retirement can feel like a countdown. You may have a target date, a sense of what you want life after work to look like, and a clearer picture of the resources you’ve already built. At the same time, there may still be several meaningful ways to strengthen your financial position before the paycheck stops. A lot of questions come into focus here: how much to keep saving, which accounts should receive it, whether there are tax opportunities worth using while your income is still relatively high, and how those choices fit the retirement income strategy you’re building. Your final working years can be the chance to bring those pieces together.
Look at What You Can Still Save
As retirement approaches, it’s tempting to assume the important saving decisions are already behind you. But your remaining working years may still offer ways to add to retirement savings, especially if you’re eligible for catch-up contributions under current rules. The more useful question isn’t just whether you can contribute more, but whether those extra dollars are going to the accounts that best fit your broader plan, which may mean reviewing workplace plans, IRAs, taxable accounts, cash reserves, or other resources you expect to use in retirement.
Your savings strategy can also shift as the date gets closer. You may want to balance building more assets against keeping enough liquidity for upcoming expenses, major purchases, or the transition away from employment.
Use Your Tax Situation Intentionally
Your final working years can also be a valuable time to look more closely at taxes. Your income, deductions, retirement contributions, investment activity, and future retirement income all shape the picture, and a decision that makes sense this year may look different once your employment income changes. The timing of contributions or other tax-sensitive moves, for example, can matter more when you weigh how your taxable income might change after you retire.
That doesn’t mean every tax opportunity needs to be pursued. Some strategies come with tradeoffs, and the value of any one decision depends on your circumstances and your assumptions about the future. The goal is simply to understand your choices while you still have time to act on them.
Give Your Accounts Different Jobs
By the time retirement approaches, you may have accumulated assets across several types of accounts. A workplace retirement plan may sit alongside Roth accounts, taxable investments, cash, or other assets, and each can carry different tax characteristics, withdrawal rules, and levels of flexibility.
Instead of treating them as separate buckets, it helps to think about how they work together. It’s worth asking which accounts could provide income early in retirement, which assets are better suited for long-term growth, where to keep liquidity, and how withdrawals from different accounts would affect your taxes. Working through those questions before retirement can turn a collection of accounts into a more intentional strategy for using your wealth.
Revisit the Gap Between Saving and Spending
The final working years are also a good time to compare what you’re saving today with what you expect to spend tomorrow. Your retirement spending may not look exactly like your current household budget, some expenses may disappear while others grow. Travel, hobbies, family support, housing decisions, health care, and other priorities all affect how much income you’ll need, which makes your savings target more meaningful once it’s connected to an actual retirement lifestyle.
If there’s a gap between where you are today and what your preferred timeline requires, you still have options. While you’re still earning, you may be able to adjust savings, spending, your investment strategy, retirement timing, or other financial decisions.
Coordinate the Decisions Before You Retire
Catch-up savings and tax planning are most useful when they’re considered alongside the rest of your retirement strategy. Your contribution decisions may affect your future tax picture, your account mix may affect how you generate retirement income, your retirement date may affect how long you have to save, and your Social Security or pension decisions may influence how much you draw from your portfolio. These decisions are connected. Rather than waiting until your final year of work, you can use the remaining years to test different scenarios and spot where adjustments could make the transition into retirement more manageable.
Questions Worth Bringing to a Planning Conversation
A few questions are worth talking through:
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- Are you taking advantage of the savings opportunities available to you?
- Which accounts should receive additional savings?
- How could your tax situation change when employment income ends?
- Should you be thinking differently about traditional, Roth, and taxable assets?
- How much liquidity should you maintain before retirement?
- What does your current savings rate mean for your preferred retirement date?
- Are there decisions you should make now because they may be harder to change later?
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Make the Most of the Time You Have Left
The final working years are more than the stretch between today and your retirement date, they can be an important planning window. Additional savings, tax-aware decisions, and a thoughtful approach to your accounts can help you enter retirement with a clearer sense of how your resources fit together. The closer retirement gets, the more it helps to coordinate what you save, where you save it, and how those decisions fit the financial life you’re preparing to create.
If it would help to map out those final working years, you can connect with Craft & Sage to identify the opportunities, tradeoffs, and decisions worth addressing while you still have time to make changes.
