The 10-Year Window Before Retirement: Why It Defines Everything

The decade before retirement is where more wealth is either optimized or quietly eroded than any other chapter of financial life. Most people treat these years as a holding pattern: coast through the final stretch, collect a few more paychecks, then figure out the transition. That approach has real costs, and they compound. The decisions made in this window, about taxes, income design, healthcare, and legacy, will shape the quality of the thirty years that follow. There is no reset once the window closes.

Why This Decade Carries More Weight Than People Realize

Think of it this way: the last ten working years are typically the highest-earning years of a career. That concentration of income creates an equally concentrated set of planning opportunities, and a concentrated set of risks if those opportunities aren't used. Tax rates can be managed before required minimum distributions (RMDs) begin to force withdrawals. Roth conversions can be executed while income is still predictable. Social Security timing can be decided with full information. A coordinated strategy across all these dimensions, put in place now, may add meaningfully to lifetime wealth. Vanguard's Advisor's Alpha research has found that a well-coordinated advisor relationship may add about 3% in net returns over time, through behavioral guidance, tax-smart decisions, and disciplined withdrawal sequencing. Individual outcomes will vary, and that figure is not a guarantee, but it illustrates the scale of what's at stake in these years.

The alternative, allowing each of these decisions to happen in isolation, or by default, is also a choice. And it tends to be an expensive one.

The Risks That Don't Announce Themselves

Most wealth in the pre-retirement decade isn't lost in a single dramatic event. It erodes through a series of quiet, uncoordinated decisions made in the absence of a plan. A few of the most consequential risks worth understanding:

• Sequence-of-returns risk. A meaningful market downturn in the first few years of retirement can permanently alter the trajectory of a portfolio, not because of the loss itself, but because early withdrawals lock in those losses and reduce the base that future growth can work from. Income layering and tax-smart withdrawal sequencing are designed to address this risk before it arrives.

• Healthcare costs. This is one of the largest and most chronically underestimated retirement expenses. According to Milliman's 2024 Retiree Health Cost Index, a healthy 65-year-old couple can expect to spend upwards of $395,000 on healthcare costs in retirement. That figure doesn't include long-term care. Planning for Medicare bridge coverage, IRMAA surcharges, and HSA optimization before retirement, not after, changes the math considerably.

• Tax drift. Without proactive bracket management and Roth conversion planning in the years before RMDs begin, many retirees find themselves pushed into higher tax brackets than necessary. The tax planning window that exists in the pre-retirement decade, before Social Security, pensions, and RMDs stack on top of each other, is genuinely finite.

• Longevity.matter. Today's retirees routinely spend 25 to 35 years in retirement. A plan built only for the early years, when spending tends to be higher and health better, may not hold up over that full horizon. Sustainable withdrawal rates, lifetime income floors, and longevity-aware asset allocation need to be built in from the beginning, not retrofitted later.

Income Design Belongs Before Retirement, Not After

One of the most common planning gaps we see is treating retirement income as something to figure out once the paycheck stops. By that point, several of the most valuable decisions have already been made by default. Social Security timing, pension election options, and the sequencing of different account types all carry meaningful long-term consequences, and they interact with each other in ways that are easier to optimize when you're still working.

Retirement income design, done well, creates what we think of as a pension-like income floor: a base of reliable, predictable income that covers essential expenses regardless of what markets do in a given year. Building that floor while still employed, integrating Social Security strategy, any pension decisions, and portfolio withdrawal sequencing into one unified plan, gives the rest of the portfolio room to stay invested for long-term growth rather than being forced to fund short-term needs at the wrong moment.

The Transfer Problem Most Families Overlook

A coordinated pre-retirement plan addresses more than just income. It also addresses what happens to wealth after it's transferred. Research consistently finds that 70% of family wealth is lost by the second generation, through taxes, poor planning, and the absence of an intentional transfer strategy. By the third generation, 90% is typically gone. These aren't abstract statistics; they reflect the real cost of treating estate planning as a separate exercise rather than part of an integrated wealth strategy.

Beneficiary designations, trust structures, gifting strategy, and tax planning all connect to each other. Addressed together, and addressed before retirement rather than scrambled together at the end, they give wealth the architecture it needs to pass with purpose.

A Timeline That Has Real Urgency

The pre-retirement decade has distinct phases, each with its own priorities. In the years ten to seven out, the focus is on building the foundation: mapping the full financial picture, initiating Roth conversion strategies, maximizing retirement plan contributions, and reviewing estate documents. In the years seven to three out, the work shifts to coordination: finalizing tax-bucket allocation, deciding Social Security timing, designing the healthcare bridge plan, and addressing long-term care. In the final three years, the plan transitions from design to execution, activating the income floor, repositioning the portfolio for drawdown, coordinating Medicare enrollment, and implementing the legacy transfer strategy.

Each phase builds on the last. Skipping or delaying a phase doesn't just defer the work; it narrows the options available in the phases that follow.

The decisions made in the decade before retirement are worth more, in lifetime wealth, than anything you'll do after. The strategies you put in place now, for taxes, income, healthcare, and legacy, determine the shape of the next thirty years.

What We Build for Pre-Retirees

Our work with clients in the pre-retirement decade spans every dimension of this transition: tax optimization and Roth conversion planning in peak earning years, retirement income design that integrates Social Security timing and portfolio withdrawal sequencing, investment management that manages sequence risk while maintaining long-term growth potential, Medicare and healthcare cost projection built into the long-term wealth strategy, estate and legacy planning coordinated as part of the overall plan, and business or equity exit planning for founders and those with concentrated compensation. All of it, coordinated as one strategy, not a checklist of separate conversations.

If you're within ten years of retirement and want a clearer picture of where you stand and what this decade can do for your financial future, we've put together a detailed guide for pre-retirees at our website. It covers the risks, the opportunities, and the planning timeline in full. If you'd like to talk through your specific situation, our team is glad to start that conversation.

Head here to get the full guide: investably.com/who-we-serve/approaching-retirement

Common questions

When should I start pre-retirement planning?

The most strategic window begins roughly ten years before your target retirement date. That's when tax planning (including Roth conversions and bracket management) has the most runway before required minimum distributions begin, and when income design decisions like Social Security timing can be made with enough lead time to optimize. Starting earlier expands options; starting later narrows them.

What is sequence-of-returns risk, and why does it matter most at retirement?

Sequence-of-returns risk refers to the timing of market downturns relative to when you begin drawing from your portfolio. A significant loss early in retirement, when withdrawals are locking in those losses and reducing the base available for future recovery, can have a permanently negative effect on a portfolio's long-term trajectory. This risk is most acute in the first several years of retirement, which is why income layering and withdrawal sequencing, built before retirement and not after, are central to a sound retirement income plan.

How much should I plan to spend on healthcare in retirement?

Healthcare costs in retirement are consistently underestimated. Milliman's 2024 Retiree Health Cost Index projects that a healthy 65-year-old couple can expect to spend upwards of $395,000 on healthcare in retirement, and that figure does not include long-term care expenses, which can be substantial. High-income retirees face additional considerations, including IRMAA surcharges on Medicare premiums, which are based on income from two years prior. Building a healthcare cost projection into your retirement plan before you retire, including Medicare bridge planning for early retirees and HSA optimization, addresses these costs as a real financial variable rather than an afterthought.

Sources

• Vanguard's Advisor's Alpha framework estimates coordinated advice may add about 3% in net returns, varying by client circumstances.

• Milliman's 2024 Retiree Health Cost Index projects a healthy 65-year-old couple needs upwards of $395,000 in savings to cover healthcare costs in retirement.

• A 2026 EBRI report found some couples may need up to $469,000 in savings to cover healthcare expenses in retirement, with IRMAA surcharges an additional consideration for high-income retirees.