The Final 3 Years Before Retirement: Why Your Best Financial Decisions Aren't About Investments

By Shannon Davis

Over the years, I've noticed something interesting.

When people are ten or fifteen years away from retirement, they tend to focus on investment performance.

They ask questions like:

·       "Am I invested correctly?"

·       "Should I be more aggressive?"

·       "Am I earning enough?"

Those are important questions.

But something shifts as retirement gets closer. The conversations become less about investments and more about life.

Suddenly people are asking:

·       "When should I retire?"

·       "Can I afford to retire?"

·       "What will healthcare cost?"

·       "Should I take Social Security now or wait?"

·       "What am I actually going to do when I stop working?"

In many cases, the final three years before retirement are not about growing your money as much as possible. They're about making thoughtful decisions that help you use the money you've already spent decades building.

"Someone's sitting in the shade today because someone planted a tree a long time ago."

- Warren Buffett

Retirement planning can be described as climbing a mountain. Most of your career is spent getting to the top. Then you finally reach the summit.

But the journey isn't over.

If you've ever hiked a mountain, you know the trip down can be just as challenging as the climb up. My goal is to help you enjoy the view you've worked so hard for - and make sure you don't fall off the mountain on the way down.

Because surprisingly, some of the most important decisions you'll ever make, happen after you've reached the top.

The Shift From Accumulation to Coordination

For most of your working years, the goal is fairly straightforward: save consistently and invest wisely.

As retirement approaches, the challenge changes.

Now you're coordinating multiple moving pieces:

• Retirement accounts

• Pension income

• Social Security

• Healthcare coverage

• Taxes

• Debt

• Cash reserves

• Family goals

  
  

Individually, each piece may seem manageable. Together, they create a retirement strategy. I've found that people often underestimate how much these decisions influence one another.

A decision about Social Security can affect taxes. A healthcare decision can impact cash flow. A withdrawal strategy can influence how long retirement savings last.

The goal isn't perfection.

The goal is making decisions that work together.

Retirement Is More Than a Financial Event

One thing I wish more people understood is that retirement is not simply a financial transition.

It's a life transition.

For decades, work provides structure. It creates routines. It gives us a sense of purpose and accomplishment.

Many retirees spend years preparing financially while giving very little thought to how they will spend their time once work is no longer part of the equation.

Some people transition seamlessly.

Others find themselves asking questions they never expected:

"Now what?"

The happiest retirees I've met tend to retire to something, not simply from something.

Whether it's travel, volunteering, family, hobbies, part-time work, or community involvement, having purpose matters.

Healthcare Deserves More Attention Than Most People Give It

When I ask people what worries them most about retirement, healthcare almost always makes the list.

And for good reason.

Healthcare costs are one of the few expenses that tend to increase as we age. For some people, those costs are one of the reasons they continue working until they're eligible for Medicare.

Others, like many of the firefighters I work with, retire years earlier and need to carefully plan how they'll bridge the gap until age 65.

The final few years before retirement are often the time to develop a healthcare plan and understand:

• What insurance options will be available

• When Medicare begins

• What costs may come out of pocket

• How healthcare fits into the overall retirement budget

  
  

Planning ahead rarely eliminates uncertainty, but it can reduce surprises.

The Tax Story Matters

Another area that often gets overlooked is taxes.

Many people spend years focused on growing retirement accounts without spending much time considering how those dollars will eventually be withdrawn. Retirement doesn't eliminate taxes. In many cases, it simply changes them.

Understanding where income will come from and how different accounts are taxed can create opportunities for greater flexibility later.

One Thing I’ve Learned

Over the years, I've found that retirement planning isn't usually about finding the perfect answer.

It's about making thoughtful decisions before they're urgent.

The people who retire with the most confidence aren't always the ones with the largest accounts.

They're usually the ones who understand their options, know what their income will look like, and have a plan for the life they're building.

Retirement isn't a finish line.

It's a transition.

And the final three years before retirement can be some of the most valuable years of planning you'll ever have.

Final Thoughts

If retirement is starting to feel real, that's a good thing.

You don't need to have every answer today. You don't need a perfect plan. But you do deserve to understand your options.

As investor Benjamin Graham once said:

"The essence of investment management is the management of risks, not the management of returns."

The final three years before retirement aren't about chasing returns. They're about creating clarity, confidence, and a plan for what comes next.

Planning today for the life you want tomorrow.

Until next time,

Shannon

Sources and references informing this article include publicly available educational information from the Social Security Administration, IRS publications, Fidelity Investments' retirement research, and the Employee Benefit Research Institute (EBRI).

The views are those of Shannon Davis and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic and performance information is historical and not indicative of future results. Please consult your own financial advisor or Shannon Davis for more information.