3 Moves It Pays to Make When You're 10 Years From Retirement

Some people opt to retire in their early 60s. Others delay retirement until their 70s.

It's important to land on a retirement age that works for you. If you're someone who gets bored and restless easily, then retiring at 58 may not be the best idea, even if you can afford to do so based on the nest egg you've accumulated. 

Of course, you might land on a specific retirement age only to change your mind once it arrives. But if you have a general idea of when you'd like to retire, then it's important to make these key moves about 10 years out. Doing so could put you in a better position to retire when you want to, and how you want to.

1. Assess your savings

There's no single retirement savings figure that guarantees you'll have enough money without running out. But Fidelity suggests aiming to retire with 10 times your ending salary. 

So if you're 57 with an expected retirement age of 67, and you're earning $90,000 a year now, it may be fair to assume that you'll end up earning $100,000 by the time you retire. That would mean aiming for an IRA or 401(k) balance of $1 million.

Now, this is just a general guideline. And if Fidelity's advice doesn't work for you, so be it. You may decide you'll be fine with seven times your ending salary. Or, you may decide you want 20 times that amount.

But either way, take a look at your savings balance and see how you're doing relative to the goal you've set. If you're 10 years from retirement with $500,000 and you're aiming for $750,000, you'll know you might need to take steps to ramp up over the next decade if you want to hit that target.

2. Consider a Roth IRA conversion

Many people opt to save for retirement in a traditional IRA because that way, contributions go in tax-free, whereas with a Roth IRA, they don't. But the upside of having a Roth IRA is that withdrawals in retirement are tax-free. And Roth IRAs also don't force you to take required minimum distributions. So if you want to leave your money invested for longer, that's your right.

The good news, though, is that you're allowed to convert a traditional IRA to a Roth as long as you're willing to pay taxes on the sum you roll over. That's something you may want to do 10 years before retirement, as opposed to right before it. That way, you won't have to deal with a major tax bill when you're on the cusp of wrapping up your career and saying goodbye to your paycheck.

3. Whittle down lingering debt

Many people experience a decline in income once they stop working. And that means it could work to your benefit to have fewer bills in retirement.

To this end, aim to start chipping away at existing loan or credit card balances. That way, you might manage to enter retirement without those debts holding you back. 

You may even want to start making extra payments on your mortgage if your goal is to own your home outright by the time you retire. However, if you refinanced to a really low mortgage rate in 2020 or 2021, then it could pay to stick to your regular payment schedule, since you could instead invest that money or potentially even earn a higher return in your savings account than what you're being charged on your home loan.

The 10-year mark before retirement is a crucial time to take action. Make these key moves so you're able to set yourself up for the successful retirement you deserve.