September Financial Planning Corner
The Retirement Marshmallow Test: When to Wait and When to Enjoy
Quote of the Month
“He that can have patience can have what he will.”
Benjamin Franklin
My wife, Alyssa, is a Board Certified Behavior Analyst. I know what you’re thinking, and you’re right. She studies and influences my behavior on the daily. I like to think of myself as her most challenging case study!
All joking aside, Alyssa and I have some pretty interesting conversations about why people do what they do. What drives us? Why are some habits so hard to break? Why can we know exactly what we should do and still struggle to do it?
One night while we were laying in bed talking, she brought up a famous experiment called the Marshmallow Test. The basic idea was simple. Would a child take a smaller reward now or wait for a larger reward later?
Naturally, my financial planner brain started firing.
Retirement is filled with marshmallow tests. Save today so you can spend tomorrow. Stay invested when markets get uncomfortable. Work another year. Delay Social Security. Let compounding do its job.
But then I thought about the other side of it.
What happens when someone becomes so good at waiting that they never let themselves enjoy what they spent a lifetime building?
That is where this gets interesting.
Delayed gratification builds wealth. Knowing when to stop delaying builds a life.
The Marshmallow Test
Here’s the lowdown. In the classic experiments, preschool children were offered a choice between a smaller reward immediately or a larger reward if they waited. In the version most people remember, that meant one marshmallow now or two marshmallows later.
The researcher would leave the room, and the child was left alone with the temptation sitting directly in front of them. Some children ate the treat. Others turned away and found ways to distract themselves.
The research showed that shifting attention away from the reward helped children wait longer. The test later became famous because follow-up research found that children who waited longer tended to demonstrate stronger academic and self-regulation outcomes later in life.
A later experiment added an important wrinkle…Trust. Children waited longer when the researcher had previously kept a promise.
Delayed gratification is not about waiting blindly. It is about understanding the tradeoff, trusting the process, and believing the future reward will be worth the sacrifice.
You already know Alyssa and I will try this with our little one someday. If they take after me, they may still be staring at that first marshmallow, waiting to see if it will compound. My hope is they learn both lessons. How to wait for the second marshmallow and how to enjoy one when the time is right.
When Waiting Pays
During our working years, delayed gratification is one of the most powerful financial habits we can develop.
Saving a portion of every paycheck may mean giving up something today, but it creates flexibility tomorrow. Staying invested during an uncomfortable market requires discipline, but it allows a long-term strategy time to work. Coordinating retirement, Social Security, and withdrawals may require patience, but thoughtful timing can create meaningful value.
Take Social Security. Claiming your retired-worker benefit at 62 generally provides 70% of the full-retirement age amount. Waiting until 67 would make the monthly benefit roughly 43% larger than the age 62 check. Waiting until 70 would increase the benefit to 124% of the full-retirement age amount.
That does not mean everyone should wait until 70. Health, longevity, income needs, and life all matter. The point is that waiting can be powerful when there is a clear and valuable reason behind it.
The same idea applies to retirement itself. Working from 60 to 65 may provide five additional years to earn and save, five fewer years of portfolio withdrawals, and a shorter bridge to Medicare. That can materially strengthen a plan.
But those five years are not free. You paid for them with five years of your life.
Waiting is powerful when it has a purpose. It should never become the automatic answer simply because more money later always sounds better than less money today.
When the Marshmallow Test Goes Too Far
Here is the part of retirement planning that I do not think we talk about enough.
Many retirees have already passed the Marshmallow Test for 30 or 40 years. They worked hard. They saved consistently. They invested. They lived within their means. They took care of their families and repeatedly chose tomorrow over today.
Then retirement arrives, and the behavior that created their success does not simply shut off.
Deposits feel responsible. Withdrawals feel like failure. Watching an account balance rise feels safe. Spending from it can feel reckless.
So they wait…..
They work one more year even though the plan says they can retire. They push the family trip into next summer. They delay helping their children or grandchildren. They postpone Social Security because a larger benefit must automatically be better. They maintain a lifestyle well below what they can afford because spending still feels wrong.
Every one of those decisions could be the right decision. The problem begins when waiting is no longer serving a goal. It has simply become a habit.
Patience is a financial virtue. Fear dressed up as discipline is something else entirely.
Remember waiting also has a cost. Health changes. Energy can fade. Grandchildren grow up. Opportunities close. Your portfolio can compound. Your calendar cannot.
Tim has shared a line in many of our client meetings that hits the nail on the head:
“You don’t get a medal for being the richest person in the grave.”
Wow, does that hold true.
Delayed gratification should help fund a meaningful life. It should not replace one.
The discipline that built your retirement should not keep you from living it. If you have put in the work, built the right foundation, confirmed that the plan can support it, have some confidence in living a little.
That does not mean throwing discipline out the window. It means using your money for the purpose you worked so hard to create it.
Those marshmallows were put on the plate for a reason!
The Trust Behind the Plan
The trust component of the Marshmallow Test may be its most important connection to financial planning.
Children were more willing to wait when they trusted that the promised reward would arrive. Retirees are more comfortable spending when they trust that their plan can support them after they do.
During your working years, my role is to help you build that second marshmallow. We define what you need to save, make sure the money lands in the right places, build an investment strategy, and help you remain disciplined when life or markets test the plan.
In retirement, my role changes. It is no longer only about helping you wait. It is about helping you confidently enjoy the reward. That means building a thoughtful income strategy, stress-testing the plan, preparing for difficult markets, navigating taxes, and adapting as life changes.
It means helping you answer three questions:
1. What do I truly gain by waiting?
2. What might I lose by waiting?
3. If I say yes today, is tomorrow still secure?
Sometimes the plan will tell us to wait. Sometimes it will tell us to eat the marshmallow.
Both can be the right answer.
Final Thoughts
Life is all about balance.
Do the work. Save consistently. Invest thoughtfully. Stay disciplined. Give your plan time to work.
But when you have made the sacrifices, built the foundation, and reached the moment you spent decades preparing for, give yourself permission to enjoy it.
The longer I do this, the more I realize financial planning is not just about cash flows and balance sheets. It is about emotions, tradeoffs, life decisions, and creating the confidence to use your money in a way that makes your life better.
Money should support your life, not define it.
As always, if you are working to put a few more marshmallows on your plate, or you are staring at a full plate and wondering whether it is safe to enjoy one, my door is always open. I am happy to dive in.
You can have a conversation with me here
Yours in Planning!
Pat Kalish, CFP®
