Inflation derailed my dad's long-term retirement plan, but he's calculated that waiting is worth it
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- My dad had the chance to retire last year, but he shifted his plans by a few years due to inflation.
- He's looking forward to spending more time doing what he loves and not having to worry about money.
- This article is part of "The Finish Line," a series that offers advice and answers burning questions about retirement planning.
My dad is 67 years old and has worked in the insurance industry for the past 45 years. He is approaching retirement in the next two years. Last year, he was given the opportunity to retire. Instead, he chose to work for three more years to add to his retirement savings.
He wants to work harder now so he can afford to retire later. Because of inflation, he's thinking carefully about his timing.
The right time for retirement looks different for everyone — it depends on your career and how much money you've saved, but the factors involved are changing over time. For my dad, it's a question that comes up a lot with his contemporaries.
How my dad has been building his retirement savings
For the past 40 years, my dad has been setting aside a portion of each paycheck for retirement. First, he put the money in an IRA. Later, his company gave him the option to switch his retirement savings to a 401(k) account. The 401(k) was a better option for my dad, because his employer agreed to match his contributions to a certain amount.
He's also offsetting his retirement funds with high interest rates. He has been putting more of his savings into accounts that yield 4% interest or more. He hopes that by putting these funds aside in high-yield savings accounts, he will make more money from the interest. He is living off a smaller budget now so he can funnel more savings toward his retirement accounts.
He considered working with a financial advisor to guide his retirement process. Instead, he became the best financial advisor he could be so he wouldn't have to pay an added fee. Several times a year, he reviews his accounts and researches options for increasing its growth.
My dad tells me, "Nobody takes care of your money better than you do." He advises his friends and family to take an active role in observing and managing their money. He suggests that retirees working with financial advisors should ask questions and have regular meetings to review account projections and discuss better options.
His attention to detail made him more aware of his retirement savings and careful about spending it. Tools like a retirement calculator helped him project his retirement date.
He'd rather keep working than have to leave retirement later
My dad's close attention to his retirement funds led to the realization that he should continue to work past his original projected retirement date. Most of his assumptions about the money he and my mom will live on in retirement were based on previous expenses and inflation rates, which changed drastically over the past few years.
Inflation has been making it harder for people to retire comfortably in today's economy. The money people have been saving for years no longer covers daily expenses. Rising prices everywhere, from the grocery store to the gas pump, have convinced more people to delay retirement.
My father opted to continue working for three more years to offset the rising costs associated with inflation. He would rather continue to work than retire and find he needs to go back to work later. He says his approach to retirement is a delicate balancing act between inflation, interest rates, and savings.
He's been reviewing the monthly changes in inflation rates and the consumer price index. He noticed that the prices of goods and services have increased over the past year, so he believes he made the right decision to continue working.
He's looking forward to a slower pace
While my dad has enjoyed the challenges of the insurance industry and the connections he's made, he is looking forward to a slower pace of life. When he retires, he hopes to take on some part-time consulting work.
He also wants to devote more time to his hobbies, like basketball and reading — he's just begun coaching his granddaughter's fourth-grade basketball team. After retirement, he hopes to find more coaching opportunities.
He's looking forward to finding and accomplishing new goals during his retirement. He says opportunities to spend more time with his family mean more than his retirement savings, but he sees how building up his retirement funds now will enable him to spend more time with his family later.
This article was originally published in April 2023.