I receive scores of emails from individuals who would like to be featured in my Portfolio Makeovers. I hear from folks with eight-figure (yes, eight) portfolios and people getting by on a shoestring, individuals with full pensions as well as job-hoppers whose investments are a web of retirement accounts in multiple silos.

If there’s a unifying theme among many of the submissions, it’s that so many of them come from people who are getting close to retirement. While I haven’t calculated a mean age for submissions I’ve received over the years, the vast majority of investors who submit their portfolios are between the ages of 55 and 65. Most of them are still working but beginning to test the waters on retirement readiness. They’d like another set of eyes on the viability of their plans, as well as the positioning of their portfolios.

It’s no wonder that so many investors seek out extra guidance at this life stage, because decumulation is fundamentally more complicated than building up a portfolio in advance of retirement. Investors hurtling toward retirement quite reasonably wonder about the viability of their plans—whether they’ll have enough and how much they can take out of their portfolios each year—as well as the structure of their portfolios.

Key Tasks for Investors Approaching Retirement

As you plot out your strategy at this life stage, here are the key tasks to tackle.

1. Nourish your human capital.
2. Start mulling your Superannuation strategy.
3. Maintain your safety net.
4. Assess the adequacy of your portfolio.
5. Embark on a preretirement saving sprint.
6. Build your stakes in safe(r) securities.
7. Think about withdrawal sequencing.

Nourish your human capital

One of the best things you can do for your finances, regardless of life stage, is to invest in your human capital—your lifetime earnings power—as long as you’re employed. True, large-scale outlays of time and money to build up your resume don’t usually make a lot of sense later in life, but investing in continuing education and staying current on developments in your field do. Keeping abreast of the latest technology developments—both inside and outside of your workplace—is also crucial. After all, the best thing you can do to improve the financial viability of your retirement plan is to put in as many years in the workplace as you can.

If you’re not interested in sticking it out in your main career any longer than you absolutely need to, you might still consider an “encore career”—a later-in-life job that’s more gratifying and less taxing (but potentially less remunerative) than your main career. Being able to earn income from even a part-time job can reduce in-retirement portfolio withdrawals, thereby helping to ensure that your portfolio lasts longer than it otherwise would.

Start mulling your superannuation strategy

Staying in the workforce up to or beyond traditional retirement age has another salutary benefit: It can help you delay pulling down on your superannuation, as well as continuing to contribute to it. If you are partnered, you should take special care to strategise about your superannuation withdrawals together.

Maintain your safety net

The usual insurance recommendations apply for the years leading up to retirement: property, life and health for example. If your children are grown and off your payroll, it’s also wise to revisit your need for life insurance at this stage; while life insurance can make sense in some instances, you’ll have less of a need for it once your dependents are grown.
Long-term-care insurance may be prohibitively expensive by the time you reach your early 60s, or you may have encountered a health condition that disqualifies you from buying it. But it’s still worth pricing out a policy and formulating a plan for long-term care, especially if you have built up a sizable but not enormous nest egg.

Maintaining an adequate emergency fund remains important at this life stage. Because higher-income and/or more-specialised jobs are often more difficult to replace than is the case for people who are earlier in their careers, consider holding at least a year’s worth of living expenses in liquid assets, rather than settling for the standard advice of three to six months’ worth. There’s an opportunity cost to holding too much cash, but thanks to higher yields on cash instruments, it’s lower than it once was. Having an adequate cushion will keep you from having to raid your retirement assets prematurely.

Assess the adequacy of your portfolio

With five to ten years to go until retirement, it’s time to take a close look at the viability of your portfolio. You can start with a simple guide: Would 4% or 5% of your portfolio be enough to get by on in year one of retirement, provided you augmented that amount with a pension? For a more detailed check on your portfolio’s viability, use a tool like Moneysmart’s Account-based pension calculator. We also ran through safe spending rates, as well as various in-retirement spending systems, in our recent research on retirement income.

Even if you've been a dedicated do-it-yourselfer throughout your investment career, this is also an ideal life stage to check in with a financial adviser to assess the viability of your plan, as well as the structure of your portfolio.

The good news is that if you have 5 to 10 years left until retirement, you still have some levers left to pull if it looks like you could have a shortfall; working past 70 won't be your only option.

Not sure if you have enough in your retirement accounts? Mark LaMonica, CFA explores 4 avenues to stretch your retirement savings.

Embark on a preretirement saving sprint

Many parents spend their 40s and 50s multitasking on the saving front, stashing money away for education expenses for their kids, paying down their mortgage and savings for retirement (and often beating themselves up for not doing a great job). With children’s expenses receding in the rearview mirror, your final working years before retirement are an ideal time to give your all to retirement savings. Financial planning guru Michael Kitces notes that “the empty nest transition” provides an opportunity for people in their 50s and 60s to avert a looming retirement shortfall. He estimates that 15 years of saving 30% of income—no small feat, of course—before retirement can help bring a too-small retirement portfolio back from the brink.

You should still favour tax-sheltered vehicles like superannuation at this life stage, taking advantage of the additional bring-forward contributions to superannuation that are allowable for people that have not met their contribution cap limits in previous years.

Building assets in nonretirement accounts will also provide valuable flexibility once you begin drawing down from your accounts in retirement. By employing tax-efficient investments or structures such as trusts, you can reduce the ongoing tax drag on your taxable portfolio. Moreover, it’s not a full tax hit - you'll be able to enjoy capital gains discounts when you withdraw your assets.

Build your stakes in safe(r) securities

As retirement approaches, it’s crucial to begin reducing risk in your investment portfolio. Such assets can help you reduce the damage from what retirement researchers call sequence of return risk—the possibility of encountering a lousy market early in your retirement years, when your portfolio value is at its highest. By holding enough assets in such securities as retirement approaches, you can help safeguard against the need to withdraw from stocks when they’re depressed, thereby improving your portfolio’s long-run viability. And with interest rates up, the return potential of safer securities has also improved.

Yet even as pre-retirees need to build an adequate cushion in safer securities, it is crucial to not go overboard. People in their 50s and 60s still need plenty of stocks, as they likely have 30 or even 40 years ahead of them. Thus, they have an ample amount of time to absorb the higher volatility that comes along with stocks in exchange for the potential for higher returns.

Think about withdrawal sequencing

If you still have 5 to 10 years before retirement, it may seem premature to start thinking about which accounts you’ll draw upon when you begin spending from your portfolio. But doing so before retirement approaches can influence how to position each of those pools of money. The standard sequence for in-retirement withdrawals is taxable accounts first, followed by superannuation. That argues for putting more liquid assets in your taxable accounts (which you have probably done anyway, assuming you’re holding your emergency fund there). Meanwhile, the most aggressive, highest-returning assets (usually stocks) belong in your superannuation accounts. Because they will likely fall into the intermediate part of your distribution queue—and also likely compose the biggest share of your portfolio—you superannuation can hold a blend of safer, income-producing securities like bonds as well as higher-returning, higher-risk assets like stocks.

Editor's Note: This article originally appeared on Morningstar’s US site. It has been revised for an Australian audience.

Get more Morningstar insights in your inbox

Want to learn more about retirement? Check out our retirement bootcamp with videos, presentations and articles to cover everything you need to know about retirement.