Image via WikipediaFinancial IQ Philippines Quick Hit(s):
Retirement planning needs to have a balance on saving for the future and enjoying life.
Recently, Christine Fahlund, the financial planning director at mutual fund company T. Rowe Price circulated what you'd have to call a pretty novel retirement planning strategy for boomers. Stop saving. Instead, spend the money on cruises and other indulgences until you retire. Do this, her calculations showed, and you'll end up with 70 percent more income in retirement than someone who saves like crazy for the rest of his or her career.
Why, yes, there IS a catch: You have to work until age 70. Fahlund contrasts the results of that tactic with those of a hard-saving boomer couple who leave the workforce as soon as they become eligible for Social Security at age 62. You can see how it works out in the chart below. Maybe it's cheating to compare retiring at 62 to slaving away until 70, but Fahlund's point is, it all depends on how you define slaving.
I give her credit. Fahlund's approach addresses one of the key dilemmas anyone faces in planning for financial independence. You fix a lot of retirement financing issues if you stay with your job until 70. CBS MoneyWatch writers like Charlie Farrell, Carla Fried and Steve Vernon have written extensively about the powerful financial upside of working longer.
No comments:
Post a Comment