Syndicated financial columnist Humberto Cruz writes that it's OK for your clients to delay retirement, but it doesn't mean doesn't mean postponing gratification, at least not all of it.
Cruz reports on his conversation with Christine Fahlund, a senior financial planner with T. Rowe Price in Baltimore.
When it comes to retirement planning, "to be told you have to delay retirement is about the worst news you can receive," Fahlund told Cruz. But that's exactly the news many T. Rowe Price customers and other aging baby boomers are receiving from their advisors in light of inadequate savings and erratic market returns.
Being told they cannot afford to retire, many "will probably go into denial and ignore the advice," Fahlund said. Her solution, according to Cruz? "Delay the retirement date, not the gratification."
Say you had your heart set on retiring next year, but a review of your finances shows you will need to keep working a few more years to build up your savings. At the same time, and making sure you stay within your budget, you could start to indulge in some of the "wants" you were putting off until retirement.
"If that is a cruise, take it now," Fahlund advises. "If you wanted to build a better workshop in the basement, start investing in the equipment you want. Do not delay gratification. Focus more on the cruise and the workshop" rather than on having to keep working.
To find the money, you may want to limit contributions to your workplace retirement plan to the amount the employer will match and no more, Cruz writes. Even if you save less, or don't save at all at this point, your current savings have the opportunity to grow tax-deferred.
"The effect is very powerful for every year you can avoid tapping into your retirement assets," Fahlund said.
For more on the concept be sure to check out Christine Fahlund's piece the July issue of Boomer Market Advisor.