The 10 years leading up to retirement are a critical time to get a handle on all of your financial resources for retirement and create a realistic picture of how financially prepared you are for the future.
There’s a sweet spot when it comes to retirement planning, and it usually starts about 10 years before you plan to stop working. That’s the point when you’re close enough to retirement to know what you want your life to look like, yet far enough away that there’s still time to adjust your strategy if you find you’re not as financially ready as you’d like to be. As an example, a 49-year-old person can contribute a maximum of $18,000 into his or her qualified retirement plan, while a 50-year-old person can contribute $24,000.
In fact, the decade right before retirement is often a golden time for retirement investors. Like many people, you may be in your peak earning years, with many of life’s largest expenses—namely, house payments and college tuition—either behind you or significantly reduced. This makes the 10 years right before retirement an opportune time to bolster your retirement savings by maximizing your contributions to your 401(k) plan, IRAs and/or other savings, and by taking full advantage of any catch-up provisions that may be available to you starting at age 50.