The 10-Year Retirement Window: What to Do 5 Years Before and After Retirement

Everybody obsesses over one retirement question:

"Do I have enough?"

Wrong question. Or at least, not the only one.

Because there's a 10-year stretch — roughly the last 5 years of work and the first 5 years of retirement — where your financial life changes faster than it has in decades.

And most people sleepwalk straight through it.

Today we're fixing that. Let's go. 👇

There's nothing magic about the number 10. It's just a useful window.

Inside it, basically everything flips at once:

For 30 years the math was simple:

Earn → save → invest → repeat.

Market crashes? Annoying. You had time. You had a paycheck. You were buying on sale.

Now the math is:

Portfolio + Social Security + other income → fund your entire life.

Different game. Different rules.

Here's the thing nobody warns you about.

Two retirees. Same average return over 30 years. Same withdrawals.

One retires into a bad first five years. One retires into a good first five years.

One of them runs out of money. The other dies rich.

Same average. Totally different life.

That's sequence-of-returns risk. Once you start withdrawing, the order of returns matters enormously, because selling investments while they're down permanently removes shares that would have recovered.

Morningstar research has found that weak returns in the early retirement years meaningfully raise the odds of running out of money, with the first five years carrying outsized weight.

You can't control the market. You can control whether a bad market forces you to sell.

That distinction is basically the whole article.

These years aren't about squeezing out one more percent of return. They're about showing up to retirement with choices.

Most people estimate retirement spending like this: "I'll probably need like 70% of my salary."

Cool. Based on what?

Retirement spending doesn't behave like a percentage. Some costs vanish. Some explode. Some show up out of nowhere at 2am on a Tuesday (looking at you, HVAC system).

Start with your actual life instead. Then sort every dollar into three buckets:

This sounds boring. It's not.

When markets fall 30%, "skip the Italy trip" and "can't pay the mortgage" are wildly different problems. The bigger your flexible bucket, the more shock absorbers you own.

"I have $1 million saved."

Okay… doing what, exactly?

Better question: what job does each dollar have?

Money you need in 18 months and money you won't touch for 25 years should not be invested the same way. Some of your money is a paycheck. Some is a war chest. Some is a 30-year growth engine. Some is a tax-flexibility tool.

One number tells you nothing. The assignments tell you everything.

Imagine you retire in January. By July the market is down 28%. What do you do?

If you don't have an answer right now, that's the problem. Panic is a terrible planner.

Decide in advance. Something like:

People treat claiming like there's one obvious right age. There isn't.

Claim early → smaller monthly check, but more years of checks. Claim later → bigger monthly check for life, with delayed retirement credits generally available up to age 70.

That's a real tradeoff, and the right answer depends on health, life expectancy, marital and survivor considerations, other income, taxes, and whether you keep working.

But here's the part that trips everybody up:

The age you stop working and the age you claim do not have to be the same number.

The Social Security Administration says this explicitly, retirement age and the age you stop working are two different things. Treating them as one decision quietly deletes half your options.

The real choice you're making is: more money now vs. more guaranteed income later.

If your biggest fear is living to 97, that later income gets very valuable, very fast.

This is the sneakiest opportunity in the whole 10-year window.

Your highest-income years are while you're working. But your most strategically valuable tax years often come right after you stop.

Why? Look at the gap:

Suddenly you have unusual control over how much taxable income you recognize in a given year.

That's the window where Roth conversions get interesting. You move money from a traditional account to a Roth, recognize the taxable amount now (likely at a lower rate), and shrink the pile that will eventually be forced out as taxable income.

Not automatically a win — a conversion raises this year's income and can ripple into other things (including Medicare premiums down the line). But the principle matters:

That window doesn't stay open forever.

Tax-deferred does not mean tax-free. It means later.

Under current federal rules, required minimum distributions generally begin at age 73 for traditional IRAs and many workplace plans (specific plans and situations vary). Roth IRAs generally have no lifetime RMDs for the original owner.

So the timeline looks like this:

Retire → years of unusual tax control → the IRS starts writing your withdrawal schedule for you.

Plenty of people retire with a giant traditional balance and think "I'm set." Maybe! But the better question is: "What will this account force me to report as income when I'm 75?"

Retirement planning isn't just how much you have. It's how and when it hits your tax return.

Medicare eligibility generally begins around 65, but whether you should enroll then depends on your (or your spouse's) employer coverage and what kind of coverage it is.

Miss an applicable enrollment window and you can end up with delayed coverage or penalties. There are Special Enrollment Period rules for people still working with qualifying employer coverage.

The trap: "I'm still working, I'll deal with it later." Sometimes correct. Sometimes expensive.

You don't need to memorize the rulebook. You just need 65 on your calendar as a checkpoint, not a suggestion.

And remember — it's all connected. A withdrawal creates income. A Roth conversion creates income. Income affects taxes, how Social Security is treated, and what higher earners pay in Medicare premiums based on prior-year income.

Investments + withdrawals + taxes + Social Security + healthcare. One system, not five.

Before retirement the question is "how do I get there?" After, it's "how do I make it last?"

Not a reason to panic every time the market sneezes. A reason to never build a plan that requires selling volatile assets into a downturn.

Nobody can predict 30 years of expenses. Fine. Don't try.

Instead, decide which expenses can flex. Good years, spend a bit more. Rough years, ease off.

Portfolio pops 22%. You feel rich. You permanently raise your spending. Then the market gives it back.

Think of the portfolio as a reservoir. Good years refill it, bad years drain it. Don't let one flood convince you the reservoir got bigger forever.

Everyone argues about how much cash a retiree should hold. Wrong framing. Try this one:

How much money would let me avoid selling long-term investments at the worst possible moment?

That's what liquidity actually buys. Not yield. Time and choice.

It's not your portfolio. It's your ability to change course.

The retiree with options can absorb almost anything: delay Social Security, trim discretionary spending, work part-time, postpone a purchase, pull from a different account, shift the timing of taxable income, rebalance, dip into cash.

The retiree with no options gets whatever the market hands them.

Same balance. Completely different level of security.

5 years before:

Around retirement:

First 5 years after:

1. Retiring with a portfolio but no withdrawal strategy. Accumulation and distribution are different sports.

2. Making Social Security, tax, and healthcare decisions in separate rooms. They talk to each other whether you like it or not.

3. Assuming retirement is permanent and rigid. You can change spending, timing, accounts, risk — usually more than you think.

You don't need to predict the next crash. You don't need a perfect portfolio. You don't need to forecast 30 years of expenses to the dollar.

You just need to take seriously the decade where your paycheck disappears and your investments take over the job.

The five years before are about building flexibility. The five years after are about protecting it.

And the people who sail through it usually aren't the ones with the biggest balance. They're the ones who built enough options to say:

"I don't have to make that decision today."

That might be the most valuable form of retirement security there is.

See you next issue. 🪙

Penny Brief is for informational and educational purposes only and is not investment, tax, or legal advice. Rules referenced (Social Security claiming ages, RMD age 73, Medicare enrollment periods) reflect current federal guidance and can change — check your own situation with a qualified professional.

Sources: Social Security Administration; IRS; Medicare.gov; Morningstar retirement income research.