Five Smart Choices When Retirement Is Less Than 10 Years Away¹

No matter how close you are to retirement, it's never too late to build up your retirement savings and potentially increase the income you'll have available once you start the next phase of your life. Here are five big ways to make a difference during the last decade before you retire:

1. Max out your IRA contribution.

Investing in an IRA can offer important tax savings and boost your overall retirement income. Once you turn 50, you can contribute extra each year to help "catch up."

2. Get your employer's match for your 401(k) or 403(b).

If you aren't contributing at least enough to get all of the matching contribution from your employer, you're leaving money on the table. That match is often around 3 to 5 percent of your annual income. And since the contributions are taken out before taxes, the impact on your take-home pay will be less than you might imagine.

3. Test your living expenses.

There's a big difference between your annual household income and your living expenses. Think about everything that comes off the top of your paycheck: income taxes, Medicare and Social Security taxes, a contribution to your retirement plan, and possibly insurance premiums or a contribution to your health savings account.

Out of the rest, how much do you actually live on? That's the amount you might want to aim for when it comes to retirement income. (Try using our Retirement Snapshot^SM to see if you're on track so far.)

You can take this a step further by doing some experiments with your expenses. How much can you lower your monthly total by eating out less, or limiting your entertainment expenses? Get comfortable with your monthly expenses now and you'll be better prepared for retirement.

4. Consider keeping some aggressive investments.

An investment is considered aggressive when it offers great potential for growth combined with greater risk. (Stocks are an example of a more aggressive investment.) As you get closer to retirement, you may be tempted to put all your savings into potentially low-risk (and therefore potentially low-earning) investments.

But think of it this way: Are you going to use up your entire nest egg the first year you retire? Probably not. The goal is to make your savings last, which may mean some of the money won't be used for many years. So, depending on your individual circumstances, you can possibly afford to keep more aggressive investments in your portfolio. (For help understanding the different types of investments, talk to an Allstate financial professional.)

5. Don't wait another minute.

If you're feeling like it's too late to make a difference, you aren't alone. But the fact is, the last 10 years before retirement are a crucial time to prepare for the next phase of your life. You could be amazed at how much you can build up your savings over the course of a decade—but the only way to do it is by taking the first step.