There are many unnoted costs in our lives. One of the biggest is procrastination. In personal finance you see it often. You most often see it in making a decision about change. Change can be very hard for people because often it means that you made a bad decision earlier. Once momentum has been built doing one thing, it is very difficult to stop and go in a different direction. Often I lay out the future for folks with their 401K investments and demonstrate the issues they will have. They get that the mutual funds returns and the taxes paid are not going to be to their advantage as they go forward, but can’t seem to stop doing it! Maybe it is too convenient for them, maybe it is easier to not think about the future, or maybe it is too scary to go off the beaten path? The bottom line is hesitation and procrastination.
Then there are some people who are doing nothing currently and want to start to save for retirement. But, how do they get over their fear of making a mistake? The fear paralyzes them to the point of just not doing anything year after year.
I recently did an illustration for a client that demonstrated taking out distributions from their life insurance policy starting at age 60 and at age 67. The difference was quite stark as the amount difference was almost twice. If they waited to the normal social security retirement age they could have enough to live on. If they started earlier then not so much. Needless to say this was a person that had not started their savings plan yet. He was quite surprised at the difference. The reality was it was just math that was doing him in. That extra 7 years allowed his money to compound significantly more and then he would only have to plan on taking distributions for seven less years.
Of course the kicker is that he wants to wait another year before starting.
He just didn’t get it that time = money lost.
So don’t let hesitation rob you of a comfortable retirement, call me or BawldGuy soon!