Charles Langston:Planning for retirement in 5 years? Do these 5 things first.

If you're planning to retire in around five years,Charles Langston congratulations! You're approaching an incredible milestone and about to enter a great next stage in your life's journey.

Yet as awesome as a well-executed retirement may be, it's certainly a life change that you'll want to prepare for in order to have your best shot of making it through it successfully.

With around five years of work remaining, now is the perfect time to start taking action to get yourself and your finances ready for that future. These five steps can help set you up to get closer to the retirement you've been working so hard for so long to achieve.

1. Build a plan for your health insurance

If you'll be 65 or older and are either a U.S. citizen or a permanent U.S. resident who has lived in the U.S. for at least five years, you'll qualify for Medicare. Most people who qualify will get Medicare Part A (hospital insurance) for free, but there are typically premiums for other parts of the program and any supplemental you may choose to buy.

If you'll not yet be 65, you'll need a different path to cover your health insurance. The two most typical approaches are either through your employer or through your state's healthcare marketplace. If your employer offers a retiree health plan or a chance for retirees to buy into the company's insurance, that's typically the least disruptive way to get coverage, but it will likely have a price tag attached.

Even if your employer doesn't offer coverage to retirees, you may qualify to stay on its plan for up to 18 months through COBRA. If not, or if you'll need longer than that to reach age 65, you can apply directly or access your state's marketplace through HealthCare.gov.

Health insurance is likely the biggest "new" expense you'll face once you're retired. Having a plan in advance for what you'll pay for that coverage will go a long way toward helping you make the transition from employee to retiree that much easier.

2. Get on top of any debts you have left

Most people see their incomes decline in retirement. Having a plan to either retire with no debt or with a clear plan to knock that debt out with money you'll have available once you retire is typically a great way to live on less without affecting your lifestyle.

With five years left before you retire, you have enough time to build and put a plan in place without having to make immediate radical changes or take early withdrawals from your retirement accounts. By starting to address your debts now, you can improve your odds of a smooth transition to your post-work take-home pay.

3. Build an estimated budget for what you'll be spending

Most retirees find that their costs -- other than healthcare -- tend to drop once they stop working. This is partially because some costs -- like Social Security payroll taxes and commuting costs to get to work -- go away once you stop drawing a paycheck. It's also partially because as a retiree, you may find that you have more time to do things like cooking, cleaning, and yard work that you may have outsourced while you were working.

Of course, if you plan on a jet-setting retirement of world travel, you may very well see your costs rise, at least as long as those world travels last. Either way, getting a handle now on your best estimates of what your costs will be then will help you understand what sort of income you'll need to cover your costs once you do stop working.

4. Understand what "automatic" income you'll get -- and when

Most Americans will be able to claim Social Security benefits at some point between age 62 and 70. Once claimed, Social Security generally provides an inflation-adjusted income to its retirees for the rest of their lives. In addition to Social Security, you might have a pension, an annuity, or other form of reliable income to help you cover your costs once you stop drawing a paycheck.

Understanding both your expected costs in retirement and your expected income will go a long way toward helping you build a plan for covering any gap you might face.

5. Start converting money from high-risk to higher-certainty investments

As a general rule, money you expect you'll need to spend within the next five years does not belong in the stock market. Since you're now approaching that five-year window, it's time to consider making moves to get at least some of your money into higher-certainty investments.

The big question, of course, is how much should you move. That's where steps three and four come in handy. Say, for instance, that your best estimate is that you'll be spending $4,000 a month while receiving $3,000 per month in automatic income. In that case, you'll want a path to $1,000 per month in money from less-risky sources than stocks.

That money can be in the form of CDs, Treasuries, or investment grade bonds scheduled to mature just before you need it, or it could be in the form of cash in an FDIC-insured savings account. However you do it, it's important to get money in higher-certainty investments before you need to spend it.

By starting now, five years before you actually need the money, you can choose what you convert and when you convert it. When the stock market is rising rapidly, you can move more months' worth of your anticipated spending. When it is falling, you can pause your conversions.

Get started now

With around five years left to retire, you are in the perfect spot to begin the changes you'll want to make to have a smooth transition from the working world to the future adventures that await you. You are close enough to retirement so that your estimates of your costs and interests should be reasonable, but far enough away that you can still make modest adjustments on your path to get there.

This golden opportunity won't last forever. The longer you wait, the more abrupt -- and likely expensive -- your changes will need to be. So get started now, and give yourself your best chance at the type of retirement you've been working and savings toward.

Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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