We all do it, at least now and then, though some of us do it much more often than others. I'm referring to procrastinating. At its most innocent level, it's almost inevitable. We all have many things to do, and invariably, we put off doing some things so that we can do others. At the other end of the spectrum are those who procrastinate a lot. These people end up hurting themselves, because they just don't get around to taking action.
They may be between jobs, and keep putting off sending out resumes and contacting companies. They may be smitten with the girl next door, but have not gotten around to asking her out. They may know they need to start seriously saving and investing for retirement, but just have trouble starting. Does any of this sound familiar to you?
Why we do it
To answer the question of why we procrastinate, University of Calgary psychologist Piers Steel reviewed the scientific literature on the topic (in other words, hundreds of studies) and reported some interesting findings.
For starters, procrastination is costly even in smaller ways than screwing up your retirement. He cited an H&R Block study that estimated that the average taxpayer, by putting off preparing tax returns and then rushing at the last minute, ends up making $400 worth of errors. Over 10 years, that's $4,000 lost!
A chief cause of procrastination appears to be a lack of confidence. If you don't think you'll do well at something, you tend to put if off. That sounds right to me, at least in a financial context. After all, nearly 45% of working-age households are at risk of failing to have enough resources to meet their retirement needs, according to the Center for Retirement Research at Boston College. And according to the 2006 Retirement Confidence Survey, some 37% have never tried to calculate their retirement needs and a third are not too confident that they'll have enough to retire on. This sure smacks of dangerous procrastination to me.
What to do
If you're in this camp, or anywhere near it, all is not lost. Here are some things you might do:
- Vow to stop putting it off, recognizing that no one is perfect at managing money, and that you can do well with just a little more information.
- Take action now! Make yourself take action today, and tomorrow and in the coming weeks. The earlier you begin, the better. Read broadly -- our Retirement Center might be a good place to start. Start estimating your needs. Contribute as much as you can to an IRA and your 401(k) account.
- Invest most or all of your long-term money in stocks. A simple broad-market index fund might be all you need, offering you the ability to match the market's returns. An S&P 500 index fund, for example, will instantly invest you in 500 of America's biggest companies, such as Applied Materials
(NASDAQ:AMAT), CVS (NYSE:CVS), Linear Technology (NASDAQ:LLTC), Merck (NYSE:MRK), Nike (NYSE:NKE), and Sears Holdings (NASDAQ:SHLD).
Don't assume that reading and learning about retirement is going to be painful -- it needn't be. Check out our Rule Your Retirement newsletter service, for example -- it's prepared by Robert Brokamp, a smart and witty guy who distills what you really need to know into a manageable volume each month. A free trial will give you full access to all past issues, allowing you to gain valuable tips and even read how some folks have retired early and well. Just click here for more information.
Here's an immediate opportunity to conquer your financial procrastination a little. Because if you don't put off preparing for retirement, you may not end up having to put off retirement itself.