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Parents almost can see finish line

The Baltimore Sun

My daughter graduates from college this weekend and, God willing, she will soon be on someone else's payroll.

No matter what she is paid by any much-hoped-for employer, I will be getting a raise. One of my friends pointed out that my disposable income could actually double when Jessie gets a job.

For four years, my husband and I have kept her afloat in a sea of unpaid internships, car repairs, rising fuel prices, job-interview clothing and just plain walking-around money.

That doesn't count the estimated $210,000 it takes to raise the average child to the age of 18. And nothing about Jessie has been average.

She's had jobs - sometimes two at a time - but she never earned nearly enough to handle rent, food and the outrageous cost of college textbooks. Let alone the tuition.

She is the baby in the family, and I told my husband that in five to seven years, we might be recovered from the cost of raising and educating her and her brother.

I am just guessing, of course.

Of all the formulas out there for calculating how much to save for retirement and how to make that money last as long as you last, I haven't found any that tell me how long it takes parents to recover from the enormous financial costs of raising a child.

How long it will take me to pay off the credit card I had minted in her name. How long to pay off the check-bouncing cushion I placed under her bank account. How long to pay off the monstrous tuition loans.

And how long it will take me to restore the retirement savings I have been neglecting.

But the answer might not be, "Save more money." The answer might be, "Spend more time working."

"The general rule of thumb, for all the people who are behind where they want to be in saving for retirement, is to delay retirement until 70," said Christine Fahlund, senior financial planner for Baltimore's T. Rowe Price and the company's retirement expert.

If you delay tapping into Social Security until the age of 70, some interesting math happens.

First, you can receive your maximum Social Security benefit at that time, instead of the reduced payouts at 62 or 66. Your benefit grows by 8 percent a year from 66 to 70, Fahlund said.

"And what one of us wouldn't like to have a guaranteed 8 percent return on our investments," she said.

In addition, the inflation adjustment to your Social Security check will be calculated on that higher amount - a 3 percent inflation increase on $2,000 a month is more than 3 percent on $1,000 a month, she said.

And the additional years of work will mean that many more years during which you are not drawing down your savings.

But Fahlund suggested that my instinct to max out my 401(k) contributions with the money I am not spending on Jessie might not be the right one. This close to retirement, that money will not have significant time to grow.

"Instead of contributing to the max, contribute to the match," she said, referring to the amount of the contribution matched by my employer.

"Spend some of the money you might have contributed on doing more of what you wanted to do when you retired."

If you continue to work until 70, you won't be able to move to that Florida condo on the back nine any time soon.

"But if you spent a week or two playing golf in Florida, you might realize that you don't need to ride a golf cart all year long to be refreshed," she said.

It is the spoon full of sugar that helps the medicine go down. If you can take two weeks to hike the Appalachian Trail or take that cooking class in Tuscany, you might not feel so martyred by the fact that you couldn't retire at 62 as you planned.

IRAs and 401(k)s did not exist until I had been working for almost 20 years. Our children's generation can start saving for retirement on the first day of their first job.

That means that when they enter the expensive years of child-rearing, they can back off that retirement savings pace without suffering as much of a financial penalty.

"In the ideal world, the more you can save for retirement early in life, the better off you will be. It will be growing for you all that time," said Fahlund.

I can't make up for all that lost time - and lost savings - in the working years left to me, even if I keep showing up at the office until I'm 70.

But all the money I am no longer spending on Jessie, I might just spend on airplane tickets.

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