A successful retirement does not happen by accident. It requires careful preparation that starts years before your actual retirement date. At Parallel Wealth, we believe that the five years leading up to retirement are critical for building a strong financial foundation, minimizing risks, and setting yourself up for long-term success.

Here are five key steps you should take to maximize your retirement readiness.

1. Build a Retirement Plan Early

One of the most important actions to take five years before retirement is to have a formal retirement plan built. Ideally, this should be done two to five years ahead of your planned retirement date, and in some cases, even earlier.

A comprehensive retirement plan will:

• Map out where your income will come from and how much you will need each month.

• Incorporate tax-efficient strategies to minimize unnecessary costs.

• Address estate planning needs to ensure your assets are distributed according to your wishes.

• Allow time to make portfolio adjustments before market fluctuations impact your retirement income.

Many clients are surprised to learn, through early planning, that they can retire sooner than expected. Building a detailed plan ahead of time creates flexibility and ensures a smoother transition.

2. Align Your Investments With Your Retirement Needs

Once your retirement plan is in place, your investment strategy must match your upcoming cash flow requirements. Structuring your portfolio appropriately several years before you retire is critical to ensuring stability.

Key actions include:

• Building a "cash wedge" by setting aside three to five years of planned income outside of the stock market.

• Reducing reliance on market performance for essential living expenses.

• Structuring your investments to weather market corrections without the need to sell at a loss.

Properly aligning your investments ensures that your retirement income is ready, regardless of market conditions.

3. Plan for Healthcare Costs

Healthcare planning is often overlooked but can have a significant financial impact in retirement. Many individuals lose access to employer-sponsored healthcare plans once they retire, leaving them responsible for higher out-of-pocket costs.

Steps to take:

• Maximize your current employer health benefits before retirement, including dental work, prescription renewals, and necessary procedures.

• Research post-retirement healthcare options, including paying cash versus private insurance plans.

• Conduct a cost-benefit analysis to determine the most efficient healthcare coverage based on your needs.

Preparing for healthcare costs in advance reduces unexpected financial strain during retirement.

4. Set Up a Home Equity Line of Credit (HELOC)

If you own your home, it is advisable to set up a home equity line of credit (HELOC) before you retire. Once employment income ends, it becomes much more difficult to qualify for lending products, even if you have substantial equity.

The benefits of establishing a HELOC include:

• Access to emergency funds if needed in retirement.

• Flexibility for future downsizing, including providing a down payment before the sale of your current home.

• Peace of mind knowing you have a financial cushion available.

Setting up a HELOC costs little to nothing if it remains unused, but it provides valuable flexibility later on.

5. Secure Personal Contact Information

Transitioning away from employer-provided communication tools is an important but often forgotten step. If your primary email address and phone number are tied to your employer, you may lose critical access to accounts, two-factor authentication, and important contacts upon retirement.

To prepare:

• Set up a personal email account well in advance and update all important logins and contacts.

• Secure a personal mobile phone and number that will stay with you post-retirement.

• Begin using personal contact information for all non-work-related communications.

This simple step can save significant frustration and disruption during your retirement transition.

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Prepare Today for a Successful Retirement Tomorrow

The years leading up to retirement are critical. By taking these steps early, you can eliminate unnecessary risks, increase your financial security, and enter retirement with confidence.

At Parallel Wealth, we specialize in fee-for-service retirement planning that is customized, unbiased, and designed to give you clarity as you move toward retirement. To learn more about how we can support your journey, visit parallelwealth.com/planning.