What Should You Do 5 Years Before You Retire? 5 Moves for High-Earning Executives in 2026

Rob is 57. He is a senior vice president with $6.5 million saved, and he wants to retire at 62. By almost any measure, he looks done. (Rob is a hypothetical example, built to show how these pieces connect.)

But if he leaves before 60, he walks away from roughly $400,000 in unvested stock. All of his deferred compensation is set to land on his tax return in a single year. And his retirement budget is off by 15%. None of it shows up in his account balance.

Rob has plenty saved. What he has is a sequencing problem, and if you are about 5 years from retirement, there is a good chance you have one too.

Most advice for this stage says to save more and max out your catch-up contributions. That is fine, but with a few million dollars invested, a few extra 401(k) contributions will not change much. What moves the outcome is timing: when income hits, how it gets taxed, what you live on in year one, and what is left for year 20. Several of those decisions have to be set up years before you give notice.

Below are the 5 moves to make now if you are 5 years from retirement, and how they fit together into one plan.

5 Years From Retirement? Do These 5 Things Now (2026 Guide)

No two executive comp packages look alike. Some of you have RSUs, some have options, and some have an ESPP you have not looked at in 6 years. So instead of a single rule, run every piece of your compensation through 3 questions:

• When does it vest or pay out compared to your target date?
• What happens to it the day you leave?
• How is it taxed when it lands?

A few things usually jump out, depending on the type of comp:

• RSUs: Many plans have a retirement provision that keeps unvested shares vesting once you reach a certain age and years of service. Leave 6 months before you qualify and that money can stay behind.

• Incentive stock options (ISOs): You generally have 3 months after leaving to exercise and keep the favorable tax treatment. Starting 5 years out lets you spread exercises across several tax years and manage the alternative minimum tax (AMT).

• Nonqualified options: Exercise windows range from 90 days to several years, so know yours before you pick a date.

• ESPP: A qualifying sale generally requires 2 years from the offering date and 1 year from the purchase date.

• Deferred comp: This one has the least room for error. The payout election you made years ago is usually locked. If your plan allows a change, you generally have to make it at least 12 months before the scheduled payment and push the payout back at least 5 years. We went deeper on this in how deferred compensation is taxed.

Here is what that means for Rob. His RSU retirement provision kicks in at 60 with 10 years of service. Leaving at 62 means his grants keep vesting, while leaving at 59 would have cost him roughly $400,000. His plan also allows a deferred comp change. So instead of $900,000 hitting in one year at 62, he moves it to 5 annual installments starting at 67. That is about $180,000 a year, landing after his salary is gone. He also sets a plan to sell a slice of his company stock every year for the next 5 years.

Most people plan taxes one April at a time. Five years out, you can see 3 distinct phases:

• Remaining working years: Your income is at its peak.
• Gap years: The years after the paycheck stops but before Social Security and required minimum distributions (RMDs) begin. We call this the tax control phase.
• Income-on years: The years when that income turns back on.

The gap years are where much of the value lives. Your taxable income can drop sharply, which opens room for Roth conversions at rates you may not see again. We walked through what that window is worth in Retire at 48 vs 56 vs 60: The Math They Don't Show You.

A few 2026 rules matter while you are still working (the IRS announcement of the 2026 limits has the details):

• Roth catch-up: If your prior-year FICA wages from your employer topped $150,000, catch-up contributions at 50 and older must now go in as Roth.

• Ages 60–63: The catch-up rises to $11,250.

• After-tax contributions: If your plan allows them, combined employee and employer contributions can reach $72,000 this year, before catch-ups.

For many executives, that is a meaningful pile of Roth money built before retirement even starts.

Rob's tax map pulls everything together. His stock sales are sized so each year's gains stay out of the top brackets. His catch-ups from 60 to 62 go in as Roth. And because his deferred comp now starts at 67, he opens 5 lower-income years for Roth conversions. One deferred comp change saved tax at 62 and created room for an entire strategy.

Retire at 62 and you have 3 years before Medicare. The enhanced ACA subsidies expired at the end of 2025, so the subsidy cliff is back. For a couple buying 2026 Marketplace coverage, that line sits at about $84,600 of income. Go $1 over and the premium tax credit disappears.

Medicare has its own lookback. Your Part B and Part D premiums are based on your tax return from 2 years earlier, so your income at 63 sets what you pay at 65. The decisions that drive your healthcare costs get made well before you enroll. We covered this in detail in the final year before early retirement.

Rob has a real tradeoff here. He could keep his income under the cliff for a few years and collect the subsidy, or do larger Roth conversions and pay full price for coverage. At his asset level, the conversions often win. But he does not guess. He models both and picks the better one.

Both extremes are expensive. One is staying fully invested and hoping markets cooperate in your first years of retirement. The other is moving everything to cash and bonds at 60, when your money may need to last 30-plus years.

In our Life Driven Investing (LDI) framework, the portfolio is built backward from your life, and money is organized into the Four Liquidity Bands: 0–2 years for current needs, 3–5 years for short-term goals, 6–10 years for mid-term goals, and 10+ years for long-term goals.

Five years out, the goal is to gradually fill the first 2 bands. When the paycheck stops, your first 5 years of spending are already covered, and your long-term money is never forced to sell in a downturn.

This is where Rob's plan clicks. The stock he sells each year fills his 0–2 and 3–5 year bands. The same move lowers his concentration risk and funds his first 5 years of retirement.

This is the step people skip, and it tells you whether the rest of the plan is right. Pick a year and live on your actual retirement budget. Use the real one, with travel, house projects, and helping the kids.

If consulting, a board seat, or fractional work is part of the picture, start those conversations now while your network is warm. That is the heart of Hybrid Retirement for executives: a phased approach where full-time work gives way to flexible, optional work instead of an abrupt stop. Work becomes optional, purpose does not.

Put Social Security timing on the table too, including spousal benefits, because it plugs straight into your tax map.

When Rob did this at 58, he found he was spending about 15% more than he had assumed. For him it was not a crisis, but the plan had the wrong number in it. He found out at 58 with 4 years of paychecks left to adjust, instead of at 63 with none.

An account balance cannot see a $400,000 forfeiture, a $900,000 payout landing in one tax year, or a retirement budget that is 15% too low. That is why Rob looked done on paper. These 5 moves are also not a checklist. They are connected, and each one changes the others. The stock sales that reduce concentration risk also fill the first liquidity bands. The deferred comp change that spreads out income also opens years for Roth conversions. Those conversions then interact with healthcare costs.

• Before: A big balance and a vague date. Equity vesting on its own schedule, deferred comp set to land in one ugly tax year, healthcare treated as an afterthought, and a budget built on a guess. Each decision gets made in isolation, often after it is too late to change.
• After: A retirement date tied to your compensation calendar. A tax map that covers your working years, your gap years, and beyond. Healthcare modeled before you enroll, your first 5 years of spending funded, and a budget you have already lived on.

All figures are assumed and for illustration only.

• Equity: The RSU retirement provision starts at 60 with 10 years of service. Leaving at 59 would forfeit roughly $400,000 of unvested stock. At 62, the grants keep vesting.
• Deferred comp: $900,000 was set to pay in one year at 62. Moved to 5 annual installments starting at 67, that is about $180,000 a year.
• Company stock: Sell a slice each year for 5 years, sized to keep gains out of the top brackets, with proceeds filling the 0–2 and 3–5 year bands.
• Taxes: Roth catch-ups from 60 to 62, then 5 lower-income years (62 to 67) open for Roth conversions.
• Healthcare: 3 years before Medicare. He models staying under the roughly $84,600 line for the subsidy against larger conversions at full-price coverage.
• Spending: A test drive at 58 shows spending about 15% above his assumption, with 4 years of paychecks left to adjust.

Rob did not save another dollar. He started early enough that every one of those decisions was still his to make. This example is hypothetical and is not a prediction or guarantee of results.

This is written for corporate executives and senior leaders in their 40s and 50s, with household income of $500,000 or more, complex compensation like RSUs, options, an ESPP, or deferred comp, and a target retirement date roughly 5 years out. If that is you, the timing questions above are worth working through while every decision is still yours.

At Tailored Wealth, this is the work we do with executives in the 5 years before they step back. We map your vesting schedules, deferred comp elections, and retirement provisions against the date you actually want. Then we model the tax picture across your working years, your gap years, and the years when Social Security and RMDs turn on.

We use professional planning software to test the tradeoffs side by side: the ACA subsidy against bigger Roth conversions, a lump sum against installments, leaving at 59 against leaving at 62. Then we organize your portfolio into the Four Liquidity Bands so your first years of retirement are funded before the paycheck stops. Our Quarterly Strategy Rhythm, the review cadence where we revisit your tax, equity, and cash flow plan every quarter, keeps all of it current as vest dates, tax rules, and your own plans change.

If you are 5 years out and want to see what this looks like for your own comp, your own tax picture, and your own date, book a Free Wealth Strategy Call. It is a low-friction conversation about your plan, not a sales pitch.