5 things to do with your money when you're 5 years away from retirement

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• In the midst of all this economic uncertainty, planning for retirement requires a lot of care.
• The way you're saving and investing money should change as you get close to retirement.
• This article is part of "The Finish Line," a series that offers advice and answers burning questions about retirement planning.

With economic uncertainty looming and the possibility of a recession on the horizon, it's important to take proactive steps now to prepare for your retirement. As a financial planner, I always advocate for a resilient financial plan that can weather any financial storm. Understanding your financial priorities and taking action accordingly can reduce stress and give you more control over your future.

Here's what I think you should be doing with your money right now if retirement is on your horizon.

1. Assess your situation and budget

It's crucial to review your retirement plan so that it reflects your current financial priorities. Even if you're getting close to retirement, don't panic — it's never too late to make a plan. Consider how much money you need for retirement, what kind of investments are appropriate, and what kind of lifestyle you want after you retire.

Review your budget carefully and trim any discretionary expenses that aren't essential for survival. Be sure to factor increased costs, like healthcare, into your budgeting plans, as these costs are often overlooked, but can have a major impact on overall financial health during retirement.

2. Increase your savings

If you're nearing retirement and haven't been able to save enough already, it's a smart move to start increasing your retirement savings contributions now. The earlier you start building up financial security for the later stages of life, the better off you will be. Making an effort toward bolstering your retirement fund today will pay off in the long run.

I'd encourage you to save at least 20% (or more) of your paycheck each month if you can. But there's no one-size-fits-all retirement savings strategy. How much you should save depends heavily on your current financial picture, your timeframe for retiring, and how much risk you're willing to take on. The longer you have until retirement, the more time you have to earn back the money your portfolio might have lost in this year's downturn.

3. Embrace liquidity

If you're planning on retiring within the next five years, it makes sense to make your savings a bit more liquid (or readily accessible) as you get close to needing it. But that doesn't mean you should run to the bank and withdraw your money. If you keep all your money in cash, you'll lose out on interest earnings and be more inclined to spend the money on hand. Safer places to park your savings include high-yield savings accounts, money market funds, and certificates of deposit.

4. Focus on paying down debt

One key step to take before reaching retirement is to focus on paying down debt. Interest payments can quickly add up and consume a large portion of the budget, leaving less available money to cover the cost of living expenses.

If you're wondering how to start, consider the avalanche strategy. You start by tackling high-interest debts and work your way forward from there. This strategy can help ensure that retirement years are as financially secure as possible; after all, you don't want high amounts of lingering debt when you reach your golden years.

5. Shift your investments

As you move closer to retirement, reducing riskier investments in favor of cash reserves can help protect your finances from any potential losses due to market volatility.

You should aim to diversify your portfolio in a way that protects it or hedges against inflation. During market downturns, it's common for certain companies or industries to perform better than others. This includes investments like commodities, short-term bonds, and alternative investments like gold. But to hedge your bets, don't put all your money into one company or industry.

Preparing financially for uncertain economic times is essential — especially if you are near or already retired. By reassessing your financial priorities and making adjustments accordingly, you will gain more control over your future and feel less stressed about potential downturns lurking around the corner from your retirement. By being proactive now rather than reactive later, retirees can ensure their personal finances remain strong despite any challenges posed by an unstable economy.