Sometimes it's difficult to see the real cost procrastination has on many things in life. Retirement planning is no different. The things we do today can have a real impact on the outcomes of tomorrow. We illustrate this in a simple 3-minute video.
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Mark Twain once said, "Never put off until tomorrow, what you can do the day after tomorrow." It's easy to get into the, "I'm gonna" trap. For example, we'll say, "Someday I'm going to start that business. Someday I'm going to get in shape. Someday I'm going to get that house."
The dangers of procrastination should be pretty evident. There's always going to be a reason why we can't get started on something today. But somehow it's easier for us to kick the can down the road to a point where we don't know what obstacles are going to be getting in our way. They're still going to be there, but we get a false sense of security knowing that we don't know what those obstacles are going to be. And when those obstacles come up. It'll be just as easy to make those excuses. It's difficult to get a good solid grasp of how the future is going to look. There's never going to be a perfect time to get started on something. You're never going to have a trip where all the green lights line up for you, so you have to learn to adapt.
Let's pull this over to retirement. What is the actual cost of procrastination in retirement? The actual cost of procrastination is going to be a little bit different for every person. But let's use an example to illustrate some real numbers so you get an idea of how this can affect you. Let's say we have two individuals, Cindy and Mindy. Both Cindy and Mindy have similar jobs make the same amount of money, and both have saved $100,000 towards their retirement. The way they've saved this money is a little different. Mindy began depositing $10,000 a year in an account that earns 6% rate of return and after 10 years, she stopped depositing money into that account. Cindy waited 10 years before getting started. She then started investing 10,000 a year for 10 years. With a 6% rate of return, just like Mindy. At the end of 20 years, Mindy has a balance of $236,000. And Cindy only has a balance of $131,000. In the real world, your rate of return and how you invest in everything is going to be different than this example, but the principles remain the same. This illustrates how big an impact the decisions that plan participants make now can have.
If you'd like a second opinion on your 401k plan, please reach out to us. We have additional whiteboards on YouTube at CUI Wealth Management. We also have additional whiteboards and resources at cuiwealth.com. Please keep in mind that this is not intended to be tax or legal advice. If you need tax or legal advice reach out to appropriate professionals.