Most retirement advice assumes you have plenty of time. Start early, Save more and Diversify. All useful advice, But when retirement is just five years away, you need something more practical: What should I do now to feel ready?
The final five working years offer an important opportunity to review your retirement plans and make necessary adjustments. This is the time to assess whether your savings are sufficient, revisit your investment strategy, and prepare for the transition from a regular salary to retirement income. Taking these steps while you are still earning can help you address potential gaps and approach retirement with greater financial confidence.
Once you retire, you stop adding, you start withdrawing. Every mistake gets more expensive and every fix gets harder. You don’t have to solve everything at once. Here’s a working checklist for what the final runway actually demand:
1. Evaluate Whether Your Savings Can Sustain Your Lifestyle After Retirement
Saving regularly is a good habit. But it doesn’t automatically mean you have enough for retirement as Saving consistently and being on track are two different things.
Use your current lifestyle as the benchmark, because most people want to retire into the life they already live. A plan built on a smaller, assumed lifestyle may need cuts later.
- Start with the last 12 months of actual spending .
- Remove what will end, such as EMIs and children’s education costs.
- Add what will grow, such as healthcare, insurance premiums and travel.
- Adjust for inflation up to your retirement year, then estimate the corpus that can support this spending for 25 to 30 years.
- Compare it with today’s investment values, using moderate return assumptions.
Example (illustrative only): Estimating Your Retirement Expenses
| Particulars | Amount |
| Current monthly expenses | ₹1,00,000 |
| Less: EMI ending before retirement | ₹20,000 |
| Add: Healthcare and travel expenses | ₹15,000 |
| Estimated monthly expenses | ₹95,000 |
| Assumed annual inflation | 6% |
| Years until retirement | 5 years |
| Estimated monthly expenses at retirement | ₹1.27 lakh |
| Estimated annual expenses at retirement | ₹15.3 lakh |
This example shows how your current lifestyle can help estimate future retirement expenses. But have you accounted for unexpected medical expenses?
While the above calculation includes regular healthcare expenses, a sudden hospitalisation could put additional pressure on your retirement savings. That’s where health insurance becomes important.
If you’re relying on your employer’s health insurance, check whether the coverage will continue after retirement. Review your personal health insurance, waiting periods and coverage limits while you’re still earning.
The idea is simple: Plan for regular healthcare costs, but make sure an unexpected medical bill doesn’t eat into the savings you’ve built for retirement.
Must Read: What If Your Financial Goals Compete With Each Other?
2. Give your investments time to adjust
The portfolio that got you here is not the portfolio that should carry you through retirement. In your accumulation years, equity-heavy allocation works in your favour ,you have time to ride out volatility. But a market correction the year before you retire, or worse, the year after, can permanently impair a corpus that no longer has time to recover.
The final runway is when you gradually shift not overnight, and not entirely from a growth-first allocation to one that balances growth with stability. Some of your corpus still needs to keep compounding for a retirement that could last 25–30 years. But a portion also needs to be de-risked well in advance, so a bad year in the markets doesn’t collide with the year you actually need to start withdrawing.
3. Set aside money for the first few years
This is the step most people skip entirely, and it’s the one that causes the most damage. An accumulated corpus and a withdrawal-ready corpus are not the same thing. A withdrawal corpus is structured for one purpose: to give you predictable, low-risk liquidity for your near-term expenses ,typically the first few years of retirement , so you’re never forced to sell growth assets during a downturn just to pay this month’s bills.
Keeping the money in suitable lower-risk investments can reduce the chance that you’ll have to sell long-term investments during a market downturn. You can also plan how it will reach your bank account each month.
For example, based on the earlier calculation, your estimated monthly expenses at retirement are ₹1.27 lakh, or around ₹15.3 lakh annually. If you set aside three years of expenses, you would need approximately ₹46 lakh in suitable lower-risk, easily accessible investments.
This money can help cover your daily needs during a market downturn, while the rest of your retirement corpus stays invested for long-term growth.
You can also use a Systematic Withdrawal Plan (SWP) to receive regular payments from mutual funds. However, SWP returns and withdrawals are not guaranteed, as the investment value can fluctuate.
The idea is simple: Keep money ready for your immediate needs so your long-term investments have time to grow.
4. Check when you can actually access your money
Having enough money on paper is only part of the picture. You also need it to be available when you need it. Some investments like Tax-saving instruments, insurance-linked investments, certain fixed deposits, real estate, and even some retirement-specific products all carry lock-in periods, exit penalties, or notice periods that quietly work against you if you haven’t mapped them in advance.
For each asset, ask:
- When can I access the money?
- What will it cost to withdraw or sell?
- Does that timing match my retirement needs?
Money that becomes available three years after retirement won’t cover your first year’s bills. It may still have a place in your plan, but you’ll need another source for those earlier expenses. This simple review can uncover gaps that a total savings figure misses.
5. Give extra income a clear purpose
Your final working years may bring opportunities to save more: a bonus, a salary increase, a loan repayment ending or children becoming financially independent. Your biggest strength during these years is your regular income. Make the most of it while you’re still earning.
Decide in advance where that extra money will go. It could help close a retirement savings gap, build a fund for your first few years of retirement or cover expenses while other investments remain locked in.
You can still enjoy what you earn. The idea is to make a deliberate choice before extra income quietly becomes extra spending.
What these five years are really for ?
You don’t need to predict every market movement or every future expense. You need a plan that reflects your life today: what you have, what you’ll need in order to continue living the current lifestyle and how your savings will support you. Use these years to check the numbers, make adjustments and put a spending plan in place.
The Real Job of These Five Years
None of this is about predicting the future perfectly. It’s about making sure that when retirement arrives, your plan isn’t a projection you made once and forgot it’s a corpus that’s been tracked, rebalanced, structured, and stress-tested against reality while you still had the income and the time to fix what needed fixing.
You’ve spent years building your retirement savings. But are they ready to support you? The next five years are your chance to find out, close the gaps and make every financial decision count. Not sure where your retirement plan stands? Let ithought help you turn your savings into a retirement-ready plan.
