Here's Why the 5 Years Before Retirement Are So Important

People often look past the last few years before retirement. But those years are crucial to the development of your successful retirement plan.

James explains the reasons why these years are crucial to planning for your retirement both financially and personally.

In reason #1, you'll see what important lesson we can learn from Warren Buffet on compound interest.

Learn the tips & strategies to get the most out of life with your money.

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For more resources and content, check us out below!

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⏱Video Chapters⏱
0:00 Introduction
0:30 Reason 1: Compound interest
1:33 Example using compound interest
3:13 Reason 2: Understand the cost of retirement
4:34 Reason 3: Paying for big things upfront
5:27 Reason 4: Opportunity to take care of medical procedures
6:10 Reason 5: Chance to dream
8:20 Outro

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[Fearizthemindkiller]

You don't understand that in my last 5 years as a 60 year old I am struggling to stay employed because companies clean out out the old people, they eliminate whole departments and hire young people for half of what we were making. So the last 5 years are brutal for most corporate people. And I worked for the richest man in the world. There's a reason he is that rich.

[teatree]

Last 5 years
Is consolidate and reduce risks
Do not lose the cart
Stay healthy
Pay all your taxes
Stress reduction
Get a new interest in life to replace your career - not just travelling and eating or spend time with family- they get bored with you

[AmerQuin]

This is exactly what happened to my wife and I. We went from years of working, saving, investing and wondering if we’d have enough to retire- to now knowing that we will pretty much never run out of money. This allowed us to retire last year at the age of 60. Thanks for your great videos James!

[lynne]

Those last 5 years could come sooner than we think, such as being laid off from work. Be prepared!

[dwaynemauk]

Have 13 more years to retirement, and I probably drive my wife crazy talking about what we need to do/are doing, to prepare. #1 is getting house paid off by that date. #2, maximizing the employer contribution/match and each pay raise we get, we take that % and send it to our retirement account. #3 - all debts paid off and go cash #4 - trying to increase our cash assets so that we have enough for a major house repair, ie A/C, roof, windows, carpets, etc. While tomorrow is always an unknown, studies show that those who plan for how they deal with disaster are the ones who live the longest. We also started a diet to increase our health as well. And finally, I'm working on a notebook of notes for my wife should something happen to me, that she can open that notebook, and find where the passwords are stored encrypted, where all the accounts are and access to them, etc, so she doesn't have to search for insurance, social security processes, etc.

[CaptainQueue]

This is very accurate in my case. I'm 71 and still working. The past five years my net worth doubled even though that is still well under $500k. Over my career I made very little from interest and practically none from compound interest due to being too conservative in investing. However because of a good job I was able to work from home at good pay with zero work expenses, save much more, and max out my Social Security by not taking that until 70.

[ronsmith]

I've been retired 22 years and I started to save when I started work. The principles you talk about are true. The eighth wonder of the world is power of compound interest. But our biggest expenses were paying for my wife to enter a nursing home for the last 3 years. She had MS for 26 years. The nursing home costs were $1000 per week. She has now passed and I can start to do a little travel.

[gilmarcotte]

James is so much wiser than his age. I wish I had known him 10 or 15 years ago (I am now 76), especially that I used to live less than 10 miles from his office at the time!

[ridinwithricky]

I’m turning 55 next month. I will be depending on my pension when I retire. Currently have 34 years in the pension system. I am tier 1, which is 55 years old and 25 years of service. 23 of those years are with an employer that pays for my medical after 25 years of employment. That being said, I will be retiring in 2026 at age 57! Definitely planning on doing something, part time, to keep myself busy. 😎

[vv]

I’m 49, I’m soooo ready. I’ve worked 2 to 3 jobs at a time for many years (worked healthcare for decades, got furloughed for the first part of 2020, then worked at some of the best and worst facilities during 2020-2024 and I am done) i have had roommates helping pay expenses for most of my life and I and now I am ready to be done with it all. I am 100% confident that I can figure out what to do with my time.

[Beadgcfb]

Nice job. One thing I’d also suggest is to consider how you’ll age in your home. Look at barriers and hazards, and if remodeling or updating consider how to mitigate them with universal design and so forth.

[briancoombs]

James, this video is spot on coming from someone who just turned 60 and planning on retiring at 65.

[tombyrne]

I'm in the 4-9 year window to Retire by full retirement age . My steps to prepare are living debt free including no mortgage no auto loans. Lessening expense as in NEM 2.0 Solar last year + whole house fan adder to secure electrical costs . Looking at my long term investments and taking the initial buy in of some higher fee/lower performance mutuals out to then fund a very low fee index SP500 fund with that money yearly to hopefully double my pretty good retirement by the time I do retire. Lots of what this video states is real, you simply have more money and options than you did when younger. I wish everyone luck in building that retirement nest egg. Do some Roth conversions when the Market is down to ride it back up tax free and to get athe RMDs under control with a 5yr+ Roth

I do plan to get a new vehicle one day and pay mostly cash payoff after the first month financed to get a better deal. I also plan to do some Kitchen renovation and fence work with the extra money coming in now. That should keep my wife happy. Perhaps a battery and solar car charge one day. Glad you mentioned take on some bigger projects before retirement.

[easterlake]

My wife and I hit 1 million in our tax deferred investments, and it grew to 2 million in 60 months.
We're more conservative in our investments now, 4 years into retirement, but our balance is now 2.3 million. That's even while withdrawing.

[johngill]

The problem with number one and compounding it's a double edged sword
If you're aggressive and the worst happens you may have to retire later or with less
And if you're conservative/balanced in your investment you won't be able to be able to take advantage of as much compounding

[jbro]

Very well thought out. Perhaps what would be helpful is a 5 year checklist.

[barbarabickel]

This video is made for a very exclusive audience. He assumes everyone had a steady career and steady career growth. That is so not true of the average person in this country.

[sanjeevbhaskar]

Yes, he's right
Work till 65 pay taxes and bills and then retire at 65 and die at 68.
Statistics show that people who retire at or after 65 only live another 5 years to enjoy pension, whereas people who retire at 55 live till 80s and 90s.
I believe the best age to retire is when you think it's enough.

[CheckThisOut]

Great message.
Grammar Point: Common error in the use of “there’s”. “There’s many reasons…”. Correct: “There are many reasons…”

[cduff]

Love your videos!

I do have a question if you have time, Where did your passion for finance/ retirement planning come from?

I’m 53 and plan to retire in 5 years. I‘ve only allowed myself the opportunity to dream about my retirement in the last 3 months or so but I must say it’s brought a renewed energy to my life that I haven’t had in ages! Thank you for your advice, I now I have a new focus; steps 3, 4, and 5!