Procrastinating Can Eat at Retirement Savings

Savings for retirement cannot be delayed for a later time. This truth is ignored by 68 percent of adults aged 55 years and above. The quality of their life post retirement may suffer due to procrastination. The irony is that these people know the harm they do by missing key opportunities. The average procrastinator comprehends that 25 is the ideal age to start squirreling money away for future. This knowledge, however, did not stop the person from procrastinating. The earliest time when a person actually sets aside money for retirement begins at 65.

Making up for time lost

A number of procrastinators assume that they can make up for all the lost time during the latter period in their lives. The problem is that these are rare occurrences. Procrastinators not only should compensate for multiple years of principal contributions which were not given at the correct time, but also for the investment growth and employer matching dollars. Experts calculate that a person who begins to save at 35 years of age must save about 11.69 percent of salary to catch up with a person who began at 25 years of age. The latter saves about six percent of the total salary.

Procrastinators who begin at and above 40 years of age must save about 16.44 percent of their total salary to enjoy the same quality lifestyle post retirement after 65 years of age. It is assumed that the person at 25 years of age draw a salary of approximately $36,000. The amount increases by 1.5 percent accounting for net inflation every year. Calculations also include a three percent company 401(k) match. It also takes into account a five percent net inflation investment growth rate every year. It is clear that procrastination is not a good idea.

Excuses bring pain

It is best not to procrastinate. Do not make excuses not to save for the future. The most common reason is the most laughable one-stress. It is a constant in life, taking different forms like financial stress and physical stress. It should be remembered that if the nest egg is not crafted at the correct time, the stress will be much more greater in the latter period of life. Another reason is that many procrastinators think that they may be taken advantage of when it comes to saving money. An easy way to avoid this is to invest the money in the index funds. The latter's fees are lowest among all. It is also a good idea to comprehend what fees the retirement funds charge their clients.

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