How to Prepare for Retirement in 5 Years: The August Financial Checkup You Can’t Skip

Americans believe they will need $1.26 million to retire comfortably, yet many of us aren’t sure if we’re on track to hit that target. Transitioning from saving to living off your savings is one of the most stressful challenges retirees face. Five years away from retirement, this August is the perfect time to conduct a full financial checkup.

Understanding how to prepare for retirement requires more than checking your account balance. Our generation stands at a unique position regarding retirement planning in Fresno CA available with wealth building. This piece will walk through assessing your current retirement readiness, updating your budget and tax strategy, and taking specific actions to strengthen your retirement planning before you leave the workforce.

Assess Your Current Retirement Readiness

Running the numbers is where retirement planning gets real. Calculate your income replacement needs first. Most people require between 55% and 80% of their pre-retirement income to maintain their lifestyle after they stop working. Your salary level determines your exact target. Plan to replace around 80% of that income if you earn $50,000, while someone earning $200,000 might want closer to 60%.

Your savings should cover about 45% of your pre-retirement income. Social Security and pensions fill the gap. You need to save 15% of your pre-tax income annually to hit this target, including any employer match. Another measure suggests having 12 times your pre-retirement salary saved.

Update Your Retirement Budget and Tax Strategy

Your budget will move once you stop working. Retirement planning means preparing for expenses that either increase or appear for the first time.

Healthcare becomes your largest variable cost if you retire before 65. Marketplace premiums between $1,000 and $1,800 monthly await a 62-year-old before subsidies without employer coverage. Your income determines subsidy eligibility. Subsidies phase out above $62,600 for single filers in 2026. Managing your Modified Adjusted Gross Income through withdrawals from Roth accounts instead of traditional IRAs can keep you under subsidy thresholds. Note that 92% of marketplace enrollees reduced their premiums through tax credits in 2024.

Take Action to Strengthen Your Retirement Plan

Maximizing contributions should top your action list. If you’re 50 or older, catch-up contributions let you add $8,000 beyond the standard $24,500 limit in your 401(k) and bring your total to $32,500 for 2026. Those between 60 and 63 can contribute even more through super catch-up provisions, allowing up to $35,750 total if your plan permits. You can add $1,100 on top of the $7,500 base limit for IRAs and reach $8,600 annually.

One critical change affects high earners. Your catch-up contributions in 2026 must go into a Roth account as after-tax dollars if you earned more than $150,000 in 2025. Check your 2025 W-2 Box 3 to determine if this applies to you.

Conclusion

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”

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Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. This commentary reflects the personal opinions, viewpoints and analyses of the author, Dale Soutas. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable 3rd party . The 3rd party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.

A Qualified Charitable Distribution (“QCD”) is a direct transfer of funds from your IRA custodian, payable to a qualified charity. QCDs can be counted toward satisfying your required minimum distributions (“RMDs”) for the year, as long as certain rules are met. Some charities may not qualify for QCDs. First consult your tax advisor or the charity for its applicability. Tax loss harvesting is a strategy that may help minimize the amount of current taxes you have to pay on your investments by choosing to sell an investment at a loss. It is only appropriate for certain taxpayers in certain scenarios. Please review your retirement savings, tax and legacy planning strategies with your legal/tax advisor before attempting a tax loss harvesting strategy.

Any comments regarding safe and secure investments and/or guaranteed income streams refer only to fixed insurance products overseen by state insurance regulators and not any investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.

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Retirement Blunders to Avoid That Could Wipe Out Your Savings in 2026

Common retirement blunders devastate the financial security of many Americans. Many people claim their benefits at 62, which results in reduced monthly payments for the rest of their lives. Your retirement consultant in Fresno CA will explore how nearly 70% of people will need some form of long-term care, yet most fail to plan for these expenses. The average woman turning 67 may spend about 20 years in retirement, and this makes planning significant.

Early Planning Mistakes That Set You Up for Failure

One of the most damaging retirement mistakes you can make is to postpone your contributions. Start saving at 25 and contribute $3,000 each year for just ten years, then stop. Your $30,000 grows to about $315,500 by age 65 (assuming 7% growth each year). But delay until 35 and save that same amount for 30 years. You’ll contribute an additional $60,000 and only reach about $306,000. Time matters more than the total amount you deposit.

Most workers save nowhere near what they should. Financial experts suggest saving 15% of your pre-tax income to accumulate 10 times your salary by age 67. Yet only 43% of American workers participate in a retirement savings plan. This gap creates a crisis you can predict.

Investment and Money Management Blunders

You tap retirement accounts before age 59½ and you make one of the priciest retirement blunders. The IRS imposes a 10% early withdrawal penalty on top of regular income taxes. To cite an instance, withdrawing $10,000 from a traditional IRA could net you only $6,400 after federal taxes, state taxes, and penalties. The damage extends beyond immediate costs. That same $10,000 left untouched for 20 years with a 6% annual return would grow to more than $32,000.

You claim Social Security at 62 and your monthly benefit drops by up to 30% compared to waiting until full retirement age. Delay until age 70 and your payment increases by 8% each year due to delayed retirement credits. The break-even point falls in the late 70s or early 80s. This makes patience rewarding for those with average or above-average life expectancy.

Long-Term Financial Oversights That Drain Your Nest Egg

Healthcare expenses represent one of the most underestimated retirement mistakes to avoid. The average couple needs $345,000 to cover medical expenses in retirement, excluding long-term care. If you have that figure, it stands at $172,500. Medicare covers only about two-thirds of your costs and leaves you with big out-of-pocket expenses for premiums, copays, and deductibles.

Long-term care planning is another retirement blunder to avoid. Nearly 70% of people turning 65 will need some form of long-term care. A semi-private nursing home room averages over $111,000 a year. Assisted living exceeds $70,000 per year. Premiums become unaffordable or coverage unavailable after age 70 if you don’t purchase insurance in your 50s.

Conclusion

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”

Other Related Articles on financial management services

Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. This commentary reflects the personal opinions, viewpoints and analyses of the author, Dale Soutas. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable 3rd party . The 3rd party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.

This is not endorsed or affiliated with the Social Security Administration or any U.S. government agency

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Can You Retire with 1 Million? The Honest Truth About What It Buys in 2026

Can you retire with 1 million dollars, or has this retirement goal become outdated? Americans in a recent Fidelity survey said they expect to have saved around $1.4 million to retire, but retirees report having closer to $490,000. Your retirement plan consultant in Fresno CA, knows that this gap reveals a disconnect between expectations and reality. Healthcare costs alone present a most important challenge, as a person retiring in 2025 may need $172,500, on average, in after-tax savings to cover medical expenses throughout retirement. Inflation running in the 3% range compounds these concerns, especially when 37% of Americans say rising prices are one of the biggest challenges in preparing for retirement. You need to understand how much to save for retirement.

What $1 Million Actually Buys You in Retirement Today

A million-dollar retirement portfolio following the widely-used 4% withdrawal rule generates $40,000 annually, or $3,333 per month before taxes. When you add average Social Security benefits ranging from $1,700 to $3,000 per month, your total monthly income lands between $5,033 and $6,333. That might sound adequate until you get into actual spending patterns.

Americans aged 65 and older spent around $5,100 per month in 2024, totaling more than $61,000 per year. Housing claimed the largest share at $1,849 per month. Transportation followed at $795, and food at $662. Healthcare costs hit $650 per month. These four categories alone consume around $3,956 each month.

5 Critical Factors That Determine If $1 Million Is Enough

Whether you can retire with 1 million depends less on the dollar amount and more on five interconnected variables that shape your financial reality.

Retirement timeline is the first critical factor. Half of American men reaching 65 will live to at least 85, and half of women to 88. Planning for a 30-year retirement requires different math than a 20-year horizon. Healthy 65-year-old men face a 20% chance of reaching 93, then stretching that million across nearly three decades.

Guaranteed income streams alter the equation. Social Security replaces 40% of pre-retirement earnings and provides $2,071 monthly on average as of January 2026. Delaying benefits until age 70 increases payments by 8% annually, reducing portfolio dependency. Those with pensions gain additional stability and cover fixed expenses without market exposure.

Proven Strategies to Make Your $1 Million Last

Strategic moves separate retirees who stretch their savings from those who deplete them too early. Delaying Social Security until age 70 increases monthly payments by 8% each year beyond full retirement age. This turns a $2,000 monthly benefit at 67 into $2,480 at 70. The higher earner waiting maximizes survivor benefits for married couples and potentially adds $80,000 to a spouse’s lifetime income.

Flexible withdrawal strategies outperform rigid approaches. Morningstar’s 2026 research suggests a 3.9% starting withdrawal rate supports 30-year retirements. This approach adjusts spending based on portfolio performance rather than fixed inflation increases. Dynamic methods that reduce withdrawals during market downturns achieve 7% to 13% higher ending balances compared to static strategies.

Conclusion

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”

Other Related Articles on retirement planning

Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. This commentary reflects the personal opinions, viewpoints and analyses of the author, Dale Soutas. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable 3rd party . The 3rd party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.

A Roth conversion may not be suitable for your situation. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement, or on the distributions of your beneficiaries. The information provided is to help you determine whether or not a Roth IRA conversion may be appropriate for your particular circumstances. Please review your retirement savings, tax, and legacy planning strategies with your legal/tax advisor to be sure a Roth IRA conversion fits into your planning strategies.

This is not endorsed or affiliated with the Social Security Administration or any U.S. government agency

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The post Can You Retire with 1 Million? The Honest Truth About What It Buys in 2026 appeared first on Soutas Financial.

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