If you are planning to retire in the next five years, the window for “big wins” gets smaller and the cost of mistakes gets bigger. This is not the time for scattered decisions or reacting to headlines.
Here is the plan. Seven moves you can make now to tighten your retirement strategy, reduce avoidable risk, and increase clarity about what comes next. I am also tailoring this to Pittsburgh realities: local tax considerations, healthcare choices, and the practical questions I hear from families across Allegheny County.
1) Put your retirement date in writing and stress test it
A retirement “target” like “sometime around 65” is not a plan. We need a date range with a clear decision point.
Action steps
- Choose a retirement month and year, then define a 6 to 12 month flexibility band.
- Confirm what “retired” means for you. Fully stopped work, part time, consulting, or a phased exit.
- Run a stress test on the plan under multiple market and inflation scenarios.
Why this matters in the final 5 years The sequence of returns risk becomes more important as you approach withdrawals. A strong long term average return does not help if the market drops early in retirement and you are forced to sell at depressed prices.
Pittsburgh context Many local retirees have a mix of traditional pensions, 401(k)s, and sometimes legacy steel or union benefits. Do not assume those pieces automatically fit together. We need to model how each income source starts, how inflation adjustments work, and what happens if one spouse retires earlier than the other.
2) Build your retirement income “paycheck” plan
Retirement is not one pile of money. It is a cash flow system.
A paycheck plan answers:
- Where does your income come from first?
- How do you cover irregular expenses like a roof, a car, or a wedding gift?
- How do you avoid selling investments in down markets?
Action steps
- Separate expenses into essentials, lifestyle, and discretionary goals.
- Map predictable income sources (Social Security, pensions, and other reliable income streams).
- Create a cash and short term reserve strategy designed to cover a defined period of spending so you are not forced to sell long term investments at the wrong time.
Clear direction Our goal is not to “beat the market.” Our goal is to fund your lifestyle with a disciplined withdrawal strategy that can hold up across good markets and bad.
3) Get Social Security right, not just “as soon as possible”
For many households, Social Security is the backbone of retirement income. Claiming decisions are permanent in ways that most people underestimate.
Action steps
- Verify your earnings record at SSA.gov.
- Compare claiming strategies for each spouse, especially survivor benefit implications.
- Coordinate claiming with your overall income and tax picture, since the timing of benefits can affect what other planning options are available.
What to avoid
- Claiming early without understanding the long term impact.
- Making the decision based on one rule of thumb. “Take it at 62” or “always wait until 70” is not planning.
Pittsburgh context If you are leaving a large employer in the region, confirm how your retiree medical coverage, if available, bridges you to Medicare. That healthcare bridge can influence when you stop working and when you claim Social Security.
4) Reduce taxes with a coordinated withdrawal plan
In the final five years before retirement, tax planning becomes leverage. Not because we can control tax rates, but because we can control which dollars you spend and when.
Most retirees have money across:
- Pre tax accounts (like a traditional 401(k) or IRA)
- Roth accounts
- Taxable brokerage accounts
A coordinated withdrawal plan helps you decide which account to tap first and how to balance taxes over time.
Action steps
- Clarify what accounts you have and how each one is taxed when you withdraw.
- Look ahead to years when your income may be temporarily lower (for example, right after you stop working). Those years may create planning opportunities, but the right move depends on your full tax situation.
- Coordinate with your CPA or tax professional before making tax sensitive decisions.
Important note Tax rules are complex and change over time. We focus on building an informed, coordinated approach and we involve your tax professional as needed.
Pennsylvania and Pittsburgh angle Pennsylvania has unique tax treatment for certain retirement income, but it does not eliminate the need for planning. Federal taxes can still be the biggest moving piece, and decisions like Medicare premiums, Social Security taxation, and investment gains can connect in ways that surprise people.
5) Audit your investment risk before the market does it for you
Here is what I see too often. People approach retirement with a portfolio built for accumulation, not distribution. Then a down market exposes the mismatch.
This is not about going to cash. It is about aligning risk with the job the money needs to do.
Action steps
- Define your required return range based on your income plan, not your wish list.
- Review concentration risk. Company stock, a single sector, or a handful of holdings can quietly dominate your portfolio.
- Ensure you have a rebalancing discipline. Rebalancing is a risk control tool, not a performance trick.
Results oriented focus We build a portfolio to support the plan, not a plan to justify the portfolio.
For pre retirees vs retirees
- Pre retirees: You still have human capital, meaning you can earn. That usually allows a bit more flexibility.
- Retirees: Your portfolio is doing more of the heavy lifting. Preserving flexibility matters more than chasing returns.
6) Lock down healthcare and Medicare decisions early
Healthcare is one of the biggest variables in retirement, and it does not get easier if you wait.
Action steps
- If retiring before 65, map your coverage options and costs, including any employer or spouse plan.
- At 65, coordinate Medicare enrollment timing to avoid penalties.
- Consider Medigap vs Medicare Advantage based on your travel habits, provider preferences, and budget.
- Build healthcare costs into your retirement cash flow, including premiums, deductibles, and out of pocket expenses.
Pittsburgh context We are fortunate to have major healthcare systems and many plan options in Western Pennsylvania. That also means the choice set can be overwhelming. Your decision should match your doctors, your medications, and how you actually use care.
Strategic clarity We do not guess on this. We quantify it, and we make sure your income plan can support it.
7) Update your estate plan and beneficiary designations
If your estate plan is outdated, your retirement plan is incomplete.
Here is the hard truth. Beneficiary forms can override your will. That includes IRA and 401(k) beneficiaries.
Action steps
- Review and update your will, power of attorney, and healthcare directive.
- Confirm beneficiary designations on retirement accounts, life insurance, and bank accounts.
- If you have minor children or grandchildren involved in your plan, confirm guardianship and trustee provisions where applicable.
- Revisit insurance needs. Some people need less coverage approaching retirement, others need coverage structured in a different way for income replacement, legacy goals, or final expenses.
Pittsburgh practicalities Many families here have multi generational ties to neighborhoods, properties, or small businesses. If there is any real estate, family business interest, or shared property involved, that needs to be coordinated carefully so your heirs are not left with confusion and conflict.
A Pittsburgh focused pre retirement checklist you can use this month
If you want momentum, start here.
- Set the date: Pick your target retirement month and year.
- Inventory income: Social Security estimates, pensions, rental income, part time plans.
- Categorize spending: Essentials, lifestyle, goals.
- Review accounts: Pre tax, Roth, taxable, HSA.
- Assess risk: Confirm allocation and concentration levels.
- Confirm healthcare path: Pre 65 bridge, Medicare at 65.
- Update documents: Estate plan and beneficiaries.
If you do only one thing, do this: tie every decision to a written income plan. That single step brings order to everything else.
Commonly asked questions
1) Should I pay off my mortgage before I retire?
Not always. Paying off a mortgage can reduce monthly expenses and increase peace of mind, but it can also concentrate your cash in home equity. The right answer depends on your interest rate, liquidity needs, tax situation, and how stable your retirement income is.
2) How much cash should I keep heading into retirement?
There is no universal number. We typically look at your essential expenses, the stability of your income sources, and how you want to handle market downturns. The goal is to avoid being forced to sell long term investments at the wrong time.
3) When should I start Social Security?
It depends on health, life expectancy assumptions, spousal benefits, other income sources, and tax considerations. We model multiple scenarios so you can make a decision you will not second guess.
4) I have a pension. Does that mean I can take more investment risk?
A pension can reduce pressure on your portfolio, but it is not a free pass to ignore risk. We look at the pension payout options, survivor benefits, inflation features, and how it fits with Social Security and portfolio withdrawals.
5) What is the biggest tax mistake people make before retirement?
Two common ones. First, withdrawing from accounts without a strategy and creating avoidable taxes. Second, making tax moves without coordinating the decision with the rest of the plan and your tax professional.
6) How do I plan for long term care?
Start by defining what risk you want to insure, and what risk you are willing to self fund. Then evaluate options, which can include traditional long term care insurance, hybrid policies, or setting aside dedicated assets. Not every solution fits every household.
7) Should I roll my 401(k) into an IRA when I retire?
Sometimes. It can simplify management and expand investment choices, but it can also change creditor protections, fees, and distribution options. This is a decision we evaluate based on your plan, not a default move.
8) I want to retire, but I am nervous about market volatility. What should I do?
We focus on what we can control: your spending plan, withdrawal strategy, portfolio risk level, diversification, and rebalancing discipline. Volatility is normal. A clear plan is how you move through it.
Ready for clear direction? Let’s build your 5 year retirement plan
If you are within five years of retirement, you do not need more random tips. You need a coordinated plan that connects income, investments, taxes, and healthcare.
Schedule a meeting here: Contos Pikras Wealth Advisors
We will review where you are today, identify the key decisions coming next, and map a strategy designed to help you retire with confidence here in the Pittsburgh area.
This article is for informational purposes only and is not individualized investment, tax, or legal advice. Investing involves risk, including the potential loss of principal. Consider working with qualified professionals regarding your specific situation.