The Cost of Procrastination: Why Waiting to Plan Your Financial Future is Costing You More Than You Think

 

We all procrastinate in some areas of life—putting off that dentist appointment, delaying the gym membership, or avoiding that home repair project. But when it comes to financial planning, procrastination can have serious long-term consequences. The cost of waiting can translate into lost opportunities, higher expenses, and increased stress.

 

So why do people put off financial planning, and what does it really cost? More importantly, how can you take simple steps today to set yourself up for a more secure future? Let’s break it down.

 

Why Do People Procrastinate When It Comes to Money?

 

 

Procrastination in financial planning often stems from psychological and emotional barriers. Here are some common reasons people delay taking action:

 

Fear of the Unknown: Many people avoid retirement planning because they don’t know where to start. The unfamiliarity of financial jargon and the complexity of investment options can feel overwhelming.

 

 

Denial: Some individuals believe they have plenty of time or hope future circumstances will “sort themselves out.” They underestimate the power of compounding interest and overestimate how much they can catch up later.

 

 

Perfectionism: The desire to make “the perfect plan” can be overwhelming and often leads to inaction. People may wait until they feel they have enough knowledge, resources, or time to get it exactly right.

 

 

Competing Priorities: Everyday expenses, family responsibilities, and short-term financial goals can take precedence, leaving retirement planning on the back burner.

 

 

Fear of Failure: Concerns about making the “wrong” investment or falling short of goals can cause analysis paralysis, where fear prevents any decision.

 

 

A Tale of Two Investors: Action vs. Procrastination

 

 

 

Let’s consider two individuals, Jessica and Steven, both 30 years old. They each have the goal of saving for retirement but approach it differently:

 

Jessica Starts Right Away: She begins investing $500 per month into a retirement account, earning an average return of 7% annually. After 35 years, when she is 65, Jessica has about $829,000 from that one investment.

 

 

Steven Procrastinates 10 Years: He decides to start at age 40, contributing the same $500 per month at the same 7% return. After 25 years, when he is 65, he ends up with only $412,000.

 

By procrastinating for 10 years, Steven ends up with about half of what Jessica accumulated. While Jessica invested $180,000 over her lifetime, Steven invested $120,000, but the difference in their investments is $417,000. Procrastination cost Steven $357,000 in retirement, incorporating his lower initial investment. That’s the power of starting early—compound interest does the heavy lifting over time.

 

 

More Costs of Financial Procrastination

 

 

 

  • Lost Investment Growth: Every year waited is a year of compounding returns lost. In Steven’s case, it cost him $357,000.

 

 

  • Higher Retirement Contributions Later: Late starters must invest significantly more to reach the same goal. To match Jessica’s amount at retirement, Steven would need to invest $12,000/year, costing him an extra $120,000.

 

 

  • Fewer Opportunities for Strategic Tax Planning: Proactive planning allows for tax-efficient investment strategies. Jessica put half her investments in a Roth account, reducing her tax burden in retirement, while Steven will pay an extra ~$3,000 per year in taxes.

 

 

  • Limited Options for Emergencies: Without financial planning, unexpected expenses can derail long-term goals. Jessica had an emergency fund; Steven did not and had to finance a roof repair with a credit card, paying $5,077 in additional interest.

 

 

  • Relying on Social Security Alone: Many retirement procrastinators become overly dependent on Social Security, which may not be sufficient for their lifestyle. Steven found himself in that position and had to continue working.

 

 

  • Higher Debt Levels: Without a clear financial plan, people accumulate debt that becomes difficult to manage. Jessica ensured all debts were paid before retirement, while Steven carried debt into retirement, costing him an additional $714,000 over his retirement years.

 

 

  • Emotional Costs and Anxiety: Constant worry about finances can take a toll on mental health, impacting overall well-being, immune function, and career opportunities.

 

 

The Tally

 

Over his lifetime, procrastinating on retirement planning cost Steven $1.697 million. 

 

 

His retirement income averaged $55,000 per year until his investments ran out at age 89, leaving him with only Social Security. In contrast, Jessica had $79,000 per year in retirement and left a financial legacy of $476,000 for her beneficiaries.

 

How Procrastination Affects Retirement Living

 

 

Procrastinating on financial planning can dramatically alter retirement lifestyle. Without sufficient savings, people may:

 

 

  • Be forced to work longer than expected.

 

 

 

  • Downsize their home, relocate, or move in with family.

 

 

 

  • Struggle to afford healthcare and long-term care expenses.

 

 

 

  • Miss out on travel, hobbies, and leisure activities.

 

 

 

  • Rely heavily on family members for financial support.

 

 

Simple Steps to Take Action Today

 

 

Create momentum and start making progress:

 

Start Small: Even $50 a month is better than nothing.

 

Automate Contributions: Set up automatic transfers into savings and investment accounts.

 

Take Advantage of Company Benefits: If your company offers a matching retirement plan, contribute at least up to the company match—it’s free money!

 

Prioritize an Emergency Fund: Having 3-6 months of expenses saved provides peace of mind.

 

Seek Professional Guidance: A financial advisor can help create a customized plan.

 

 

Your Future Is in Your Hands: What Actions Will You Take?

 

 

Financial security isn’t about perfection—it’s about consistency. Small actions add up over time. Make a plan to complete one new financial goal each quarter or each month until your goals are reached. Here are some ideas to get started:

 

 

 

Final Thoughts: The Best Time to Start is Now

 

 

 

Financial procrastination is costly, but it’s a habit you can break. Whether you’re 25 or 55, the sooner you take action, the more time you have to build a strong financial foundation. Don’t let uncertainty or fear hold you back—start today, even if it’s just one small step. Your future self will thank you.

 

*These hypothetical examples of mathematical compounding are used for illustrative purposes only and do not reflect the performance of any specific investments. Fees, expenses, and taxes are not considered and would reduce the performance shown if they were included. Rates of return will vary over time, particularly for long-term investments. Investments offering the potential for higher rates of return also involve a higher degree of investment risk. Actual results will vary.

 

**All guarantees are subject to the claims-paying ability of the issuing insurance company.

 

†These are fictional and illustrative forecasted scenarios only, in order to illustrate the points of the article. Illustrations are based on actual products available and use an average of 6% annual return.

 

††NEXT Financial Group, Inc. does not provide tax or legal advice.  For such guidance, please consult your tax and/or legal advisor.

 

 

 

 

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