Key Takeaways
- The five years before retirement are for decisions, not just saving. This is when you turn a retirement date into a working plan for income, taxes, healthcare, and your employer benefits.
- Your aerospace pay comes with moving parts most jobs don’t have. A pension, stock or equity awards, and clearance-related benefits all have timing rules that can change what you walk away with.
- Some choices lock in the day you leave. Pension survivor options, healthcare coverage, and certain benefits are decided at retirement and can’t be undone, so it pays to get them right ahead of time.
If you’re about five years from retiring, you’re far from alone. In its 2025 industry outlook, Deloitte reported that about 25% of the aerospace and defense workforce has more than 20 years of experience and is at or past retirement eligibility.1 A big share of the people who keep this industry running are facing the same decision you are.
These last five years matter more than most people expect. It’s tempting to think of them as just more time to save, but they’re the years when the important choices get made: how you’ll replace your paycheck, how to keep taxes low, how to handle a portfolio that may lean heavily on your employer’s stock, and how to lock in your pension and healthcare the right way. Getting these decisions in order now, while you still have income and options, is what makes the transition smooth.
Turn Your Retirement Date Into a Five-Year Decision Calendar
Start by picking a target retirement date, even a rough one. In aerospace, that date isn’t just personal; it can decide how much pension you’ve earned, whether your stock awards fully vest (are yours to keep), and whether you qualify for retiree benefits. Moving it by even a year can change all three.
Once you have a date, work backward and give each of the next five years a job. There’s a lot to line up, from pension paperwork to healthcare to a plan for your investments, and doing it on a calendar keeps any one deadline from sneaking up on you. Because so many of these pieces affect each other, a written timeline is worth more here than in almost any other career.
Build Your Retirement Paycheck Before Your Aerospace Pay Ends
For your whole career, your income showed up as a paycheck. In retirement, you build that paycheck yourself, from several sources, and the five years before you leave are the time to design it.
Decide Which Sources Fund Each Stage of Retirement
Your retirement income will likely come from a mix: a pension if you have one, Social Security, and withdrawals from accounts like your 401(k), 403(b), or IRA. Some aerospace workers also have deferred compensation (pay you set aside to receive later) or consulting income.
The key is to decide which source covers which stage. If you retire before Social Security starts, for example, your savings may need to carry more of the load in those early years, then ease off once your benefit kicks in. Mapping out when each source turns on, and how much it provides, tells you what your portfolio actually has to produce, and when.
Use the Five-Year Window for Multi-Year Tax Planning
These years often include a valuable tax window. Once you stop working but before Social Security and required withdrawals begin (those start at age 73 for most people today), your income may dip.2 That lower-income stretch can be a chance to take money from tax-deferred accounts, or do Roth conversions, at a lower tax rate.
A Roth conversion moves money from a traditional account into a Roth, and you pay tax on it now in exchange for tax-free withdrawals later. Done in a low-income year, it can shrink the large forced withdrawals you’d otherwise face down the road. Aerospace pay can complicate this, since a final bonus, vesting stock, or deferred compensation can spike your income in a given year, so it helps to map several years of income together rather than deciding one year at a time.
Prepare an Aerospace-Heavy Portfolio for the First Withdrawals
Many aerospace professionals end up with a lot of their wealth tied to their employer, through company stock, stock options, or equity awards built up over a long career. That can be a serious problem right as you retire.
The issue is concentration: when too much of your money rides on one company, a drop in that stock can hit your paycheck and your savings at the same time. The five years before retirement are a good time to trim that position gradually, spreading sales across years to manage the taxes, so your retirement doesn’t depend on one company’s stock price.
Your overall mix should shift too. The portfolio that grew your wealth was built for growth; the one that funds your retirement also needs stability. Keeping a year or two of spending in safe, steady investments means an early market drop won’t force you to sell stocks while they’re down, which can do lasting damage right when withdrawals begin.
Close the Employer Decisions That Change Once You Leave
Some of the most important retirement choices are ones your employer sets, and many of them lock in the day you leave. These deserve attention well before your last paycheck, because they’re hard or impossible to change later.
Set Your Healthcare Coverage Path Before Your Last Paycheck
If you retire before age 65, you’ll need to cover your own health insurance until Medicare starts, and without your employer footing part of the bill, that can be expensive. Price it out before you set a date.
Your options usually include a spouse’s plan, COBRA (temporarily keeping your work coverage, generally at full price), retiree medical benefits if your employer offers them, or a plan from the health insurance marketplace. Some aerospace employers offer retiree coverage tied to your age and years of service, so check whether staying a bit longer changes what you qualify for. Keep accessible cash for these premiums so you don’t have to sell investments to pay them.
Coordinate Pension, Survivor, Beneficiary, and Insurance Elections
If you have a pension, one of the biggest decisions is the survivor option: whether to take a larger check that stops when you die, or a smaller one that keeps paying your spouse after you’re gone.3 It’s usually a permanent choice made at retirement, so weigh it carefully with your spouse.
Review your beneficiary forms too, the paperwork that says who gets each account and policy, since these often override your will. Update them after any major life change. And look at your employer life and disability insurance, which usually ends or shrinks when you retire, so you can decide whether you still need coverage and where to get it. Sorting these out early keeps a rushed, last-minute decision from costing you or your family later.
Five Years From Retirement in Aerospace FAQs
What should I consider 5 years before retirement?
Focus on the decisions, not just the balance. Pick a target date, map how you’ll replace your paycheck, plan your taxes across several years, trim any heavy concentration in company stock, and sort out your pension, healthcare, and beneficiary choices. Five years gives you time to get these right while you still have income and options.
What age do aerospace engineers retire?
There’s no set age, and it varies widely. Many aerospace professionals retire somewhere between their early 60s and late 60s, but pension formulas, years of service, and healthcare timing often influence the exact date more than age alone. The right time depends on your finances and your specific employer benefits, not a standard number.
How can pension and service milestones affect when an aerospace professional should retire?
They can matter a lot. Pensions are often based on your years of service and your highest earning years, so working a bit longer can meaningfully raise your monthly benefit. Some employers also tie retiree healthcare or full vesting of benefits to specific service milestones. It’s worth requesting estimates for a few different retirement dates before choosing one.
What happens to aerospace company stock and equity compensation when you retire?
It depends on your grants. Some stock awards may not fully vest until a certain date, and retiring early could mean forfeiting unvested shares. Leaving with a large, concentrated position also carries risk. The five years before retirement are a good time to review your vesting schedule and gradually diversify, with an eye on the taxes, so your plan doesn’t hinge on one company.
How should aerospace professionals replace their paycheck during the first years of retirement?
Build income from a coordinated mix of your pension, Social Security, and account withdrawals, deciding which source funds which stage. If you retire before Social Security begins, your savings may carry more early on. Keeping a cash cushion and drawing from accounts in a tax-smart order helps your income stay steady and your tax bill low in those first years.
How should I plan health insurance if I leave an aerospace employer before Medicare?
Compare your options before you set a date: a spouse’s plan, COBRA, retiree medical coverage if offered, or a marketplace plan. Add up the full monthly cost, factor in a younger spouse if needed, and keep accessible cash for the premiums. Because this bridge to age 65 can be one of the biggest costs of retiring early, it’s worth pricing carefully.
Get Help Planning Your Final Five Years in Aerospace
The five years before retirement are when a long aerospace career turns into an actual plan. Your paycheck, your taxes, your company stock, and your pension and healthcare choices all have to line up, and many of them lock in the day you leave. Handling them deliberately, on a calendar, is what makes the difference between a smooth transition and a scramble.
That’s the work we do with aerospace professionals at PCM. We can help you set a target date, build your retirement paycheck, plan your taxes across the years around retirement, diversify a company-heavy portfolio, and coordinate your pension, healthcare, and beneficiary decisions before your last day.
If you’re within a few years of leaving aerospace, we’d be glad to help you sort through what to do first. Connect with us to talk through your priorities and see if we’re a good fit.
Resources:
- Deloitte: 2025 Aerospace and Defense Industry Outlook
- IRS: Retirement Plan and IRA Required Minimum Distributions FAQs
- U.S. Department of Labor: What You Should Know About Your Retirement Plan
