Retirement Retirement Planning

Within 5 Years of Retirement? 7 Things to Do Now to Maximize Your Retirement Income

These steps can help you fully prepare for your golden years.

By Catherine Collins , Edited by Laura Hohenstein

Updated Sept. 4, 2026

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If you're planning on retiring in five years, there are several steps you can take to increase the amount in your 401(k) retirement plan. These include taking advantage of catch-up contributions, making a plan for your withdrawal strategy, and staying up to date on required minimum distribution rules.

There are also several tips for leaving work successfully and preparing for retirement, including small adjustments you can make to transition more easily into your golden years.

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Make sure to take advantage of super catch-up contributions

If you are five years from retiring, one of the most straightforward ways to maximize your retirement income is to contribute as much as possible to your retirement accounts. The current 401(k) maximum is $24,500. However, if you're over age 50, you can make an extra $8,000 catch-up contribution. Even better, if you're between the ages of 60 and 63, you can make an $11,250 catch-up contribution. If you have an IRA, the catch-up contribution is $1,100. Your last five years of working are your final opportunity to top off your retirement account and add as much as possible before leaving the workforce.

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Stay up-to-date on new income-based catch-up contribution rules

If you do take advantage of catch-up contributions, take the time to get up to date on the new income-based contribution rules. As of 2026, workers age 50 and up who earned more than $150,000 in prior-year wages from the employer sponsoring the plan must make their catch-up contributions as Roth contributions, not traditional 401(k) contributions. For many people, this will be a big change, as high-income workers could use catch-up contributions to lower their taxable income in the past. However, with Roth contributions, that's not possible.

Make a full retirement plan, including timing your Social Security income

Another important decision to consider when you are a few years from retiring is when you want to start taking Social Security income. Delaying Social Security beyond full retirement age can increase your benefit by about 8% per year until age 70. However, taking Social Security early can reduce your check. Because this is guaranteed lifetime income, it's worth planning when you're going to start taking it.

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Consider a Roth conversion before Required Minimum Distributions (RMDs) start

Some retirees decide to complete a Roth conversion after they retire, but before they are required to make 401(k) withdrawals. That's because income during the early years of retirement is typically lower, which is more tax-advantageous for a Roth conversion. A Roth conversion can also help reduce taxes later on in retirement since you can withdraw Roth contributions tax-free, as long as it meets certain requirements.

Whether or not this option is beneficial for you will depend on your personal finances, your income, the balance of your 401(k), and how much you want to convert into a Roth IRA. Work with a financial planner who can review your detailed financial picture and offer advice on whether or not the strategy would be beneficial for you.

Build a cash buffer of at least one year's expenses

Most people understand the benefits of having an emergency fund, but having cash set aside becomes even more important in retirement. Some financial experts recommend having enough cash to cover 18 to 24 months of expenses. That's because once you're in retirement, it's good to have a backup plan if you don't want to withdraw from your 401k during a turbulent market. Having cash set aside allows you to have money for unexpected emergencies without having to dip into your nest egg.

Practice living on your retirement income before you leave your job

One of the best ways to prepare to live on your retirement income is to practice. Many people live on less during retirement than they do during their working years. For example, if you live on $7,000 a month now and plan to live on $5,000 a month in retirement, use your last year of work to budget and track your spending to stay within a $5,000-a-month budget. This can help ease the transition into retirement and help living on a lower income in retirement feel less shocking.

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Eliminate high-interest debt before quitting the workforce

According to the Federal Reserve Bank of New York, the total outstanding credit card debt in America is $1.26 trillion as of the second quarter of 2026. Transitioning to retirement means moving from a salaried income to a fixed income. For that reason, paying off high-interest debt can help increase your cash flow during retirement. Additionally, taking steps to avoid new debt in retirement can help ensure you have enough money to live on in your golden years.

Bottom line

If you're within five years of retirement, there's little room for financial mistakes. That's why it's so important to take the time to create a solid plan for your retirement years. If you're not sure of the next steps to take or how to develop a realistic spending plan, consult a financial planner who can give you personalized financial advice.

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