Here is the question - Is it 5 or 10 years out that is the most important when it comes retirement? The answer is actually 10 years. I come across many articles that talk about the importance of 5 years before retirement and what you should consider. However, 10 years before retirement is more important for two reasons. First, you need to be able to cast a vision for retirement, figure out what is most important, and make sure you have the right goals in place. Second, there are definitely things that need to be addressed sooner rather than later. There are aspects that take more than 5 years to achieve. Ten years out gives you just enough time. Plus there are things that you have to be doing 10 years out to get you ready for that 5 year period.
10 Years Out from Retirement - Steps to take
First, the goal is to pay-off your mortgage before you retire. For some, that can't be done in 5 years and you need more time. Make sure you build a game plan at that 10 year mark so that you can get an idea of what you are up against.
Second, you need to determine your cash need for retirement. How big of a cash/emergency account do you want to maintain? Would you need to start thinking about that now or address it at the 5 year mark?
Third, do you have an income plan? If you don't now would be the time to investigate. Income plans need time to mature.
Fourth, are there any major expenses that are needed to be taken care of or planned for? Things like weddings, home remodeling, etc take financial commitment. How are you going to pay for them without dragging debt into retirement?
Finally, are you on track investment wise? If you need to make changes, now is the time to do so.
What you do between 10 and 5 years determines the success you will have at the 5 year mark. Work on some planning at that 10 year mark. If not, time flies and retirement will catch up with you without being prepared.