Retirement Planning: Overcoming Procrastination and Getting Back on Track

Photo byMira Norian / Investopedia

When it comes to planning for retirement, procrastination can be more than just a minor inconvenience—it can be a significant financial misstep. According to a recent CNBC survey, a staggering 40% of American workers are falling behind on their retirement savings. If you’re one of them, you’re not alone. But here’s the kicker: the biggest regret for many isn’t the lack of funds but rather the missed opportunity of starting to save earlier.

The Perils of Procrastination

Imagine you’re 30 years old, and retirement feels like a distant dream. You’re juggling student loans, a mortgage, or perhaps just living here and now. Fast forward to 60, and that dream is not only closer but also potentially fraught with financial worry. The survey highlights that older generations, particularly baby boomers, are more likely to look back with regret. About 37% of boomers wish they had begun saving sooner, compared to just 5% of Gen Zers who are just starting out.

Jacqueline Reeves, director of retirement plan services at Bryn Mawr Capital Management, sums it up: “If you do less at 30, you’ll still have more at 60 than if you did more at 50.” It’s a simple yet powerful message: the earlier you start, the better off you’ll be.

The Good News and the Gap

On a brighter note, there are positive trends in retirement savings. As of the second quarter of 2024, 401(k) and IRA balances have hit some of their highest averages ever, and the number of 401(k) millionaires is at an all-time high. This is partly thanks to favorable market conditions and better savings habits.

However, despite these encouraging statistics, many still aren’t saving enough. The average contribution rate for 401(k)s is 14.2%, just shy of the recommended 15%. While this rate is a step in the right direction, it’s often insufficient to ensure a comfortable retirement. Experts recommend saving between 15% to 20% of your income.

The Growing Concerns

The anxiety about retirement isn’t just about having enough money—it’s also about the fear of not having enough. LiveCareer’s survey reveals that 82% of workers have considered delaying retirement due to financial concerns. Moreover, 70% of retirees wish they had started saving earlier, underscoring the urgency of early planning.

If you’re worried about running out of money in retirement, you’re not alone. Many Americans share this concern, highlighting the importance of saving and starting early. It’s not just about putting money aside; it’s about giving your savings the time to grow. Knowing that you’re part of a community facing the same challenges can provide a sense of connection and understanding.

Taking Action

So, what can you do to avoid falling into the 40% who are behind? Start by assessing your current savings and setting realistic goals. Even if you’re starting later than you’d like, it’s never too late to make a change. Consider increasing your savings rate, even incrementally, and take full advantage of any employer matches available to you.

Remember, retirement planning is a marathon, not a sprint. The earlier you start, the more time your money has to work for you. And if you’re already saving, keep up the good work and aim to boost your contributions if possible. Taking action can bring a sense of relief, knowing that you’re doing something about your future.

Ultimately, the best way to avoid future regret is to take proactive steps today. So, whether you’re in your 20s or your 50s, start thinking about your retirement now. Your future self will thank you. The key is to start early, stay consistent, and watch your savings grow, inspiring you to take action.