Many people procrastinate when it comes to saving for retirement ... but the sooner you start, interest compounding work more in your favor.
Financial Engines conducted a survey to better understand why people procrastinate on their retirement savings. They learned that most of those surveyed identified 25 as the right age to start planning and saving for retirement, but that most had started much later than the following :. An average of 10.6 years later than they thought they should have
They attributed the delay in retirement savings for various reasons:
- 50% - stress
- 40% - other, higher priorities
- 24% - worried about being
- 23% - not sure how to go about it
- 20% - thought it was too difficult
While people think they can make up for it later - and sometimes they can - every year of delay squanders the advantage of compound interest. To achieve the same savings goal, they would need to save more each year to compensate for missed investment growth, as well as every game of missed employer, if available.
The graph below shows the percent of income would need to be saved each year to achieve the goal of saving.
But the better- late-than-never rule comes in - even if you missed the advantage of a quick start, the sooner you start the better, so do not delay. Here are some tips offered by Financial Engines start to end:
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