Many people are guilty of some form of procrastination, whether that means they put off filing for taxes as long as possible or just have an ever-increasing stack of papers on their desk to sift through. This can be especially true with financial responsibilities because doing financial paperwork isn’t exactly “fun” for most people.
Mark Twain once said “Never put off until tomorrow what you can do the day after tomorrow.”
According to a 2016 report from the Insured Retirement Institute, only 55 percent of baby boomers have set aside savings for retirement. That means that the other 45 percent don’t have retirement savings to fall back on. Whether it’s that they have a significant amount of debt, their finances are tied up in ongoing expenses, or that they hold onto the idea that they will have time to save for retirement down the road, people are always going to have excuses to delay saving for retirement. Putting off saving for retirement by even a few years, however, can mean the difference between the retirement you desire and outliving your money.
How this kind of procrastination might affect your retirement
Based on calculations, a 25-year-old that saves $100 every month until he retires at age 65, with an annual return of 6.5 percent, would accumulate over $225,000. If he waited until he was 40 years old to start contributing to his retirement account, the balance would be a significantly smaller at $75,000. According to a report by the U.S. Government Accountability Office, the median amount of savings for many Americans is about $104,000 for households with members between 55 and 64 years old. That figure tells us that many Americans aren’t saving nearly enough for retirement.
The amount that you need for retirement varies by each individual as there are several factors to be taken into consideration.
What should someone do if they find themselves behind on the retirement savings spectrum?
One of the most beneficial things you can do for your retirement savings is to sit down and come up with your list of realistic expenses that you think you will face in retirement. This can help you determine how much you will need to save, and help you gauge how far along you are in your retirement savings process. If you aren’t sure where to begin when it comes to creating a retirement budget, you can start by looking up online what some of the average expenses are in retirement.
This will include factors like:
- and others
For the most part, a lot of your day-to-day expenses will change dramatically when you retire. You won’t need to commute to work every single day, for example. You also may have your house paid off by then, so you wouldn’t have to worry about mortgage payments. There are some unpredictable costs in retirement such as health care. Healthcare costs tend to rise throughout your retirement, and the older you get, the more medical help you will likely need. It’s important to factor in these unpredictable costs into your plans, so that you can be as prepared as possible.
Your unique situation could look much different, depending on a list of things:
- Your lifestyle in retirement. Are you someone who hopes to travel a lot during your retirement? Or enjoy a round of golf every day?
- Your health and life expectancy.
- Your housing.
- And many other factors