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By Christine Benz | 02-17-2010 03:54 PM

Delay the Date, Not the Gratification

Having to delay retirement is no picnic, but it can be more palatable, says T. Rowe Price senior financial planner Christine Fahlund.

Christine Benz: Hi, I'm Christine Benz for Morningstar. Retirement planning is on a lot of investor's minds these days, and I am happy to say that Christine Fahlund from T. Rowe Price is here. Christine is T. Rowe's senior financial planner, and she has done a lot of research on retirement planning and managing your nest egg in preparation for retirement.

Chris, you and your team did some interesting work. I think you call it the "Work Longer" study. Can you discuss the research there and the findings and the takeaways for people who are getting ready to retire or thinking about retirement?

Christine Fahlund: Absolutely. What we found when we talked to individuals who were thinking about retirement was that many of them had not accumulated the amount of wealth they needed in order to be able to support the lifestyle they wanted in retirement.

And so we began to look at solutions for them. How could they do that fairly quickly? And when we looked at making additional contributions, that didn't seem to help that much. When we looked at changing your asset allocation to a more aggressive one, that didn't seem to help very much.

So we came away with two "a-ha" moments--things that really can make a difference. One is delaying the date of your retirement so your employer is paying for more of your expenses for more years. And the second one was we found that Social Security, by delaying that, the increases are significant in what you can obtain.

So together, we found that if you can delay retirement for even two or three years and delay Social Security at the same time, you can significantly improve your results for a really wonderful retirement.

Benz: So as you acknowledge, though, that is not a palatable answer for a lot of retirees. They hear "work longer, delay Social Security," that doesn't come easily for a lot of retirees.

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