Put Off Retirement? No Way!

Every career has its share of days you never forget. There are the early memories, such as getting that first paycheck, and milestones like scoring the big promotion or the morning you finally moved into the corner office. But for many people, there's one special day that stands head and shoulders above the rest: the last.

Whether it's marked by a year, an age or even a specific date, the promise of that first day of retirement is the beacon that guides people through the often daunting process of planning for their golden years. But now, with would-be retirees still dusting themselves off from the punch of last year's market crash and today's slow-to-recover economy, many are finding that their beacon has disappeared-or at least relocated. In fact, a recent study by gerontology research and consulting group Age Wave found boomers reporting that their retirement will need to be postponed an average of 3.6 years. And with retirement accounts losing $3.7 trillion-42 percent of their value-during the crash, the idea that the average American could still expect an on-time arrival at the next phase of their life seems little more than fantasy.

But there are no delays in sight for Ira Marks. Yes, he watched his portfolio drop 30 percent from peak to trough in the crash. And yes, the housing downturn has hammered his commercial real estate brokerage. But Marks still says he's on track to retire in less than five years-a bit earlier than originally planned, actually. His strategy for staying on schedule is simple: Change everything else. In the past several months, the Floridian from Vero Beach has refinanced his home at a lower rate, cut back on spending and even started taking mediation classes, thinking he might dabble in the work to bring in extra income. He has also avoided the temptation to get more conservative with his investments, hoping the other tweaks will give his nest egg time to recover. "What goes down must come up," says Marks.

Although postponing retirement is a powerful tool (an additional year of work can boost annual investment income by about 7 percent, according to T. Rowe Price Associates, it's far from the only option for would-be retirees hoping to get their plans back on track. Clamping down on spending is one popular save-the-date strategy, which can include everything from eliminating luxuries like posh vacations and new cars to a wholesale downsizing that can land retirees in cheaper states-or even cheaper countries. Others are revising their plans to include a few hours of work, or adjusting their investing strategy to give themselves the best chances of recouping their losses down the road. And while no one thinks these changes will be easy, some experts say that they could ultimately lead to a happier, more fulfilled version of retirement. "Think of it as course correction," says Ken Dychtwald, founder and CEO of Age Wave.

So don't erase that magic date from your calendar just yet. To find the best ways to adjust your retirement strategy, we polled a range of planners and experts, and consulted with retirees and soon-to-bes who are out there living their postcrash contingency plans. Below, four paths for keeping your retirement time line in line.

Bill Rideout has never shied away from risk. The Salt Lake City attorney has taught Navy jet pilots, lived in nine states and launched a new career when he was 58. And when it came to his crash-weakened portfolio, his attitude was no different: full speed ahead. "You take a risk in the market like you take a risk when you get up in the morning," says Rideout. So when falling prices knocked his target allocation of 60 percent stocks down closer to 50 percent, he took a deep breath and bought more stocks. Since then, his portfolio has slowly made up ground, and Rideout is confident enough in its future that he just left the U.S. Department of the Interior to join his wife, Anne, in retirement. "You have to go with the flow," says the 63-year-old, "in life and in retirement planning."

Not bad advice. What's more, financial advisers say people who want to stand pat on their retirement date need to keep their assets in the market. But given the bumpy ride they've endured, it's no surprise that many seem to be ignoring such recommendations; a survey this year by McKinsey & Co. found that, of respondents who changed their portfolios because of the financial crisis, 62 percent report investing more conservatively or moving assets into cash. Not only does this strategy lock in losses, says Christine Fahlund, senior financial planner at T. Rowe Price, it all but eliminates the chances your nest egg will recover. Indeed, Fahlund recommends that people enter retirement with about 60 percent of their portfolio in stocks and continue to hold a big chunk of equities even into their 90s.

For people looking to bounce back without putting their retirement at risk, experts continue to recommend a diversified portfolio but encourage investors to seek out growth areas. "People shouldn't see it as a 'set it and forget it' enterprise," says Hans Olsen, chief investment officer for J.P. Morgan's private wealth management business. With some experts speculating that Asia will lead the economic recovery, international stocks can help boost portfolios. And the potential for future inflation has many advisers urging clients to invest in commodities, which fare well when purchasing power drops. The key to minimizing the riskiness of these bets, says Olsen, is to limit them to a small slice of your portfolio-no more than 8 percent for Asian emerging markets and 6 percent for commodities.

Another area retirees can tweak is the amount they withdraw from their portfolio each year. The usual rule of thumb is about 4 percent the first year, with adjustments for inflation each year thereafter. But since the crash, this one-size-fits-all formula may no longer apply. Fahlund suggests retirees keep withdrawals fixed, rather than factoring in inflation, and slowly trim their budgets to adapt. "Most of us can't do it overnight," she says. Some other advisers argue that withdrawal percentages can be bumped up to account for shrunken nest eggs. Jonathan Guyton of Cornerstone Wealth Advisors in Edina, Minn., recommends about 6 percent in a down market, provided retirees don't tap the equities portion of their portfolio until the market rebounds. The caveat, Guyton says, is that people must be prepared to make major spending cuts when necessary and be willing to rebalance in less than ideal times.