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Top 10 reasons why we procrastinate on retirement planning Print PDF
Top 10 reasons why we procrastinate on retirement planning

I saw a fairly clever poster last week at my local library, sitting on top of a table laden with self-help books:

This table was not far from two other seasonal displays: one composed of 2016 federal and state tax return forms and another stocked with materials related to Money Smart Week.

The connection of procrastination and tax return forms is pretty obvious. Tax season probably brings out the procrastinator in people more regularly than any other life event. Year after year many of us vow to get our returns in early this time, yet the local news never fails to show long lines at post offices up until midnight of Tax Day. (Of course, with the advent of online filing, this is becoming much less of a story!)

Money Smart Week, held this year April 22-29 (and part of Financial Literacy Month), was started by the Federal Reserve Bank of Chicago in 2002. It brings together “financial institutions, non-profits, libraries, universities, and government agencies” to offer thousands of free financial education classes, webinars, and other educational activities across the country. You can learn more at

Money Smart Week also has a strong thematic relationship with procrastination, and, in fact, attacks the issue head-on as it relates to people’s efforts at financial planning, or lack thereof. The objective of Money Smart Week is to create awareness of key financial-planning issues and promote financial literacy. It encourages individuals to get an early start on planning for major life goals, whether starting a family, buying a home, or creating a cash-positive household budget.

Past presenter Gregory Berlin from the Society for Financial Awareness gave a talk during 2014’s Money Smart Week titled “The 25 Biggest Money Mistakes People Make.” The top-ranked mistake? “Procrastinating to avoid financial decisions.” Mistake #2 was in many ways related to procrastination, inertia, or plain old lack of focused effort: “Having financial goals that are too general, undefined, or unrealistic.”

Two important areas where people tend to procrastinate are probably easy to guess: (1) developing a sound retirement income plan, and (2) helping to fund their children’s college education.

According to a 2016 Gallup Poll, “not having enough money for retirement” is the #1 financial concern of people surveyed in the U.S., yet estimates of those not saving for retirement (outside of Social Security) range anywhere from 30%–60% of the adult U.S. population. According to a June 2016 study published by the U.S. Government Accountability Office (GAO), “About half of households age 55 and older have no retirement savings (such as in a 401(k) plan or an IRA).” Even more disturbing is the finding that “among those with some retirement savings, the median amount of those savings is about $104,000 for households age 55–64.” No matter how you look at it or what statistics you believe, there is a huge shortfall in retirement savings in America.

There are also many conflicting statistics about American households planning for college expenses, but most do not paint a positive picture. A 2016 study by Sallie Mae says, “About two in five families had created a plan for how they would pay for college before the student enrolled.”

I interviewed a financial advisor for Proactive Advisor Magazine earlier this year who specializes in strategic college funding plans. In her experience from working with hundreds of families, she observed,

“Most families are ill-prepared for college costs and wait far too long to start planning. Based on my personal experience, half of all families have not saved at all for college costs. I would estimate that close to 70% of families have saved less than $3,000 per college year for each potential college student in their family. This is a disturbing situation, and, if not addressed, will place a huge burden on families and students as they face their financial future.”

Jason Zweig, columnist at The Wall Street Journal and author of “Your Money and Your Brain,” wrote this about procrastination in early 2017:

“Procrastination, in its stealthy way, is a silent wealth killer, doing more financial damage, day in and day out, than skyrocketing interest rates or the cruelest stock market crash. For when you postpone a decision to act on a financial goal, you’ve actually made a decision—to save less or stay in debt—even though none of us thinks about it quite that way. Then inertia takes over, making it harder and harder to change course as time passes. No one knows the exact cost of all this foot dragging, but it surely runs into tens of billions of dollars a year.”

So, why do people procrastinate, especially about something as important as planning for retirement? There are many “lists” of reasons out there, but, based on what I have heard from dozens of financial advisors, I thought this one at captured it well. In the reverse order made famous by David Letterman lists, here is one advisor’s take on “The Top 10 Reasons Why People May Not Plan For Retirement”:

#10 “I’m too busy.”

#9 “It’s too soon.”

#8 “It’s too late.”

#7 “I don’t need to.”

#6 “I don’t have enough money to get started.”

#5 “My finances are a mess.”

#4 “The government will take care of me.”

#3 “Between my savings and my 401(k), I’ll be fine.”

#2 “I don’t want to think about it.”

#1 “I don’t know how.”

I am sure it would be relatively easy to find more depressing statistics about other financial issues facing Americans, such as the “true” unemployment rate, the stagnation of wage growth, or the myriad financial issues concerning any aspect of health-care funding. But surely, there must be some positive facts coming out of Smart Money Week?

If you are reading this blog post, there probably are. If you are a financial advisor, you are contributing mightily to helping your clients achieve their financial goals in a time-sensitive manner. And if you are an individual investor, you are greatly benefiting from the services of your advisory firm. While both groups surely know this already, Money Smart Week put some numbers to it.

One of the many guides in the resource section of cited four important factors in achieving personal financial and investing success:

1. Consider professional guidance.

2. Determine your personal goals.

3. Analyze your risk tolerance.

4. Think about your time horizon.

In support of the first item on this list, “Consider professional guidance,” the guide cited the following statistic from the National Bureau of Economic Research:

Over a lifetime, investors with a financial plan accumulate on average 20% more wealth than those with no plan.

I was struck by the consistency of these overall themes to the investing and operating philosophy espoused by Flexible Plan Investments (FPI). For more than 35 years, FPI has been a staunch advocate of (1) creating smarter, more successful investors through goals-based investing; (2) formulating portfolio strategies with a strong emphasis on risk management; and (3) letting the magic of compounded returns work over different types of markets and full market cycles. FPI takes great pride in working as a valued partner to thousands of financial advisors and retail clients.

I am sure FPI would agree far more with the serious-minded thoughts of motivational trainer and author Dale Carnegie than humorist Mark Twain’s musings:

“The best possible way to prepare for tomorrow is to concentrate with all your intelligence, all your enthusiasm, on doing today's work superbly today. That is the only possible way you can prepare for the future.”—Dale Carnegie

“Never put off till tomorrow what may be done day after tomorrow just as well.”—Mark Twain

Have a great week,


P.S. The U.S. equity markets, up until Sunday evening, were exhibiting their own form of “procrastination.” With the first round of the French presidential election looming, as well as consideration of numerous geopolitical risks and questions about Washington developments, markets have essentially been in a holding pattern since early March. Whether one calls that a consolidation or a “correction over time” to work off overbought conditions, the net effect was a rangebound market for several weeks.

With the results from France now in, and new polling showing a likely loss for right-wing candidate Marine Le Pen on May 7, European markets have soared and U.S. markets are showing nice gains as of this writing. According to Julia Coronado of MacroPolicy Perspectives, a Bloomberg radio guest this morning, “A huge tail risk was taken off the table for Europe.”

Statista published the following poll data with commentary this morning:

“Centrist Emmanuel Macron and far-right leader Marine Le Pen have both progressed to the second round of the French election, as generally predicted. Macron won 23.8 percent of the vote in Sunday's first round, ahead of Le Pen's 21.5 percent. Their nearest challengers were centre right François Fillon (19.9 percent) and hard-left Jean-Luc Mélenchon (19.6 percent).

“Most other parties are now backing Macron and he is almost certain to win the presidency in the runoff. As the following infographic shows, polls also reflect that sentiment with all them showing Macron as having a considerable lead over Le Pen as they head towards the showdown on May 7th. If Macron does win, he would become the youngest president in French history at 39 as well as being the first who does not belong to a major political party.”

In case you missed it

The new FPI Knowledge Center is now available. The Knowledge Center makes it easy to find and use the extensive library of resources Flexible Plan has produced over the past 36 years on topics such as practice management, dynamic investment management, investor education, industry and market trends, and so much more. It’s also searchable, allowing you to quickly locate the resource you need. Not sure where to start? Browse through the “featured content” to get inspired. Visit the FPI Knowledge Center today!


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