Bridging the Gap: Financial Strategies for Pre-Retirees in Their 50s and Early 60s

Whether you’re six months or six years out from retirement, there are things you can do now to help ensure your next stage of life is both fulfilling and financially secure. The key? Finding opportunities to bridge any potential gaps between what you have saved up and what you think you may need to enjoy retirement to the fullest. 

Without a crystal ball, it’s impossible to tell exactly how much you’ll need to spend in order to cover your financial obligations and achieve your retirement goals (like traveling, moving closer to loved ones, or renovating your home). The good news is, an advisor can help you run simulations and calculations that provide fairly realistic estimates of what you’ll need based on historical stock market data and your existing retirement resources. 

Let’s talk about a few common strategies we can use to help you bridge the gap and address your future income needs for retirement.

First, Max Out Your Contributions

If you’re offered an employer-sponsored retirement plan, like a 401(k) or 403(b), you should absolutely consider taking advantage of the full contribution limit (including catch-up contributions for those over 50). In 2025, the contribution limit is $23,500, or $31,000 for those over 50.¹ 

If you have an IRA, you may be able to contribute up to $7,000, or $8,000 if you’re over 50.¹ 

Another important consideration? If your employer offers matching contributions, this is another great reason to max out contributions—otherwise, you’re leaving free money on the table. 

Then, Consider Making Roth Contributions (or a Roth Conversion)

Traditional 401(k)s and IRAs are funded with pre-tax dollars, meaning future withdrawals in retirement will be subject to income tax. A Roth account, on the other hand, is funded with after-tax dollars. While this means the initial contribution isn’t tax deductible, it does pave the way for potentially tax-free withdrawals in retirement. 

While the Roth IRA contribution limits are the same as a traditional IRA, you may be limited or exempt from contributing based on your income. High earners who exceed the highest income phase-out range are ineligible to contribute altogether, while others may be able to contribute a lesser amount.

Another option? Converting your existing tax-deferred 401(k) or IRA into a Roth IRA. Just keep in mind you’ll need to pay taxes on the amount converted (since you’re rolling pre-tax dollars into an account funded with after-tax dollars). You’ll also need to do this at least five years before you’re ready to withdraw from the account—otherwise, your withdrawals may not qualify for the tax-free treatment.

Create a Bucket Strategy for Withdrawing in Retirement

Many retirees find it helpful to lump their retirement resources into three “buckets” representing short-term or immediate, mid-term, and long-term financial needs. The assets within each bucket take on varying levels of risk based on how soon you are likely to need them.

For example, the assets residing in the “long-term” bucket (say those that are 10+ years out) will often prioritize growth, while those in the mid-term and immediate buckets will shift gradually toward liquidity and stability. 

Establishing specific buckets can help retirees address longevity risk (the chance of outliving your money). Because you’re only drawing from your short-term bucket to cover your financial obligations, you’re allowing your other assets to grow, compound, and potentially recover from a market downturn in the meantime. 

Test Drive Your Retirement Budget

The great thing about retiring in a world with advanced, yet accessible, financial technology is that you can test drive your retirement budget better than ever before. Using a calculator or simulator found online, plug in your current investments and savings, other retirement resources (like a pension or annuity), and answer some questions about your anticipated timeline toward retirement and intended budget. From there, these calculators will leverage historical market data to determine how close (or far) you are from your goals based on your existing assets and portfolio.

These calculators may offer suggestions on closing the gap, or you may need to review the findings with an advisor before determining the best course of action. Either way, knowledge is power when it comes to preparing for retirement, and this is one effective way to spot-test your progress and make adjustments as needed.

Do You Feel Prepared for Retirement? 

The last few years leading up to retirement can be incredibly important. Now’s the time to batten down the hatches and prepare for your exciting transition to financial independence. As you continue on your journey ahead, consider working with an advisor who can assess your existing resources, discuss your goals and objectives, and develop a detailed strategy for bridging the gap.

Interested in learning more? Schedule a 15-minute call with our team at Partners in Financial Planning today to get started.

^{Sources:1 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000}