Why the Last Five Years Before Retirement Can Matter More Than the Previous Twenty

Author michael

Published August 10, 2026

Why the Last Five Years Before Retirement Can Matter More Than the Previous Twenty

For many people, retirement planning feels like a long journey. You spend decades building your pension, making contributions, and watching your retirement fund grow.

However, the reality is that the final five years before retirement can have a bigger impact on your retirement outcome than the previous twenty years combined.

The decisions you make during this period can affect your tax position, investment strategy, retirement income, and overall financial security for you and your family for years to come.

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Your Pension Pot Is Usually at Its Largest

By the time you reach your late 50s or early 60s, your pension fund is often at its highest value. This means market movements, both positive and negative, can have a significant effect on your retirement savings.

For example:

A 10% gain on a €500,000 pension fund adds €50,000.
A 10% loss on a €500,000 pension takes away €50,000.

Retirement Is More Than Accessing Your Pension

Many people focus on the retirement date itself, but retirement planning is about much more than simply taking benefits from a pension.

Important decisions may include:

How much tax-free lump sum you can take.
Whether to purchase an annuity or invest in an Approved Retirement Fund (ARF).
How much retirement income you will need.
How to draw down your income tax efficiently.
What happens to remaining pension assets when you die.

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These choices can have long-term consequences and are often more important than the investment decisions made years earlier.

Tax Planning Opportunities May Still Exist

The final years before retirement can offer valuable planning opportunities.

You may be able to:

Increase pension contributions.
Use company contributions efficiently if you are a business owner.
Restructure assets for greater tax efficiency.
Co-ordinate retirement benefits with other savings and investments.
Reduce potential future tax liabilities.

Leaving these decisions until your retirement date is often too late.

You Need a Clear Income Plan

One of the biggest concerns people have is whether their money will last.

Retirement is no longer a short phase of life. Many retirees can expect their retirement to last 25 to 30 years or more.

A successful retirement plan should answer questions such as:

How much income can I withdraw tax efficiently and when?
Will inflation reduce my spending power?
What happens if investment markets fall?
Can I help out my children financially without affecting my own security?

These questions are best addressed before retirement begins.

ARF Decisions Can Shape Your Future

For many retirees in Ireland, an Approved Retirement Fund provides flexibility and continued control over retirement assets.

However, flexibility also means responsibility.

Key considerations include:

Investment strategy.
Withdrawal rates.
Tax treatment.
Beneficiary planning.
Managing income through different market conditions.

The right strategy can help create sustainable income while preserving flexibility for future needs. Here is a link to our page: How ARF Withdrawals Work.

Small Changes Can Have a Big Impact

The final five years often present opportunities to make adjustments that can improve retirement outcomes significantly.

These might include:

Paying additional pension contributions.
Reviewing investment risk.
Consolidating multiple pension plans.
Creating a retirement income strategy.
Updating beneficiary nominations.
Reviewing estate planning arrangements.

Many people are surprised by how much difference a few well-timed decisions can make.

Don’t Leave Retirement Planning Until Retirement

Building a pension is important but preparing to use that pension effectively is just as important. The years immediately before retirement are often when the most valuable financial decisions are made.

Taking time to review your options, understand your choices, and create a clear retirement strategy can help you move into retirement with greater confidence and clarity.

Thinking About Retirement Within the Next Five Years?

Whether you are considering your retirement options, reviewing an existing pension, or exploring how an ARF could fit into your plans, professional advice can help you make informed decisions.