When it comes to the downside of procrastination, most people focus on the danger of getting a late start on saving. Indeed, TIAA-Cref’s Ready-to-Retire Survey shows that’s a major regret. But you can also put your retirement in jeopardy by putting off certain key tasks in the years just before retirement. And the cost can be just as devastating as procrastinating earlier in life.
We all know by now (or should) that putting off saving for retirement comes with a high cost. As I’ve shown before, a 25-year-old who earns $40,000 a year, gets 2% annual raises, and contributes 15% of his salary to a 401(k) or similar plan each year, earns 5.5% a year on investments, and follows that regimen for 40 years would end up with a nest egg of roughly $1.1 million. Were that same hypothetical 25-year-old to wait until age 30 to start saving, his projected nest egg’s value would drop to $875,000. And it falls to $680,000 if he procrastinates until age 35.