Procrastination: putting off today what you could do tomorrow or next week or later. For example, I have been planning to write this article for several weeks, but now it is past due, and I have asked the editor
to give me a couple of extra days to complete it. It would be great if this were not true, but sadly, it is.
But, hey! It gave me a great introduction.
As someone who works in the financial world, I often encounter procrastination. And unfortunately, the consequences of procrastination have compounding effects not only for the procrastinator, but for friends and loved ones as well.
Sure, I had good reasons for putting off writing this article: the workload has been greater than normal over the last several months, life in general delivered extra demands, and I have allowed myself to be distracted or pulled in other directions, and this article slid down my list of priorities. But the more something gets pushed off until later, the bigger the procrastination elephant becomes, and the more it will cost.
Though I had good reasons for procrastination, the delay created consequences, and not just for me. I had to ask for grace from the editor. I had to delay other items to write this article.
I also had to ask for grace from the editor, lessening my credibility for meeting deadlines. My procrastination also holds consequences for the editor, who now must rush to meet his own deadlines. The proofing team and designers who make these articles attractive and attention-grabbing — all will have less time to hit deadlines down the road. (Sorry, everyone!) The results of procrastination are like the ripples from a pebble tossed in a pond — they just keep growing.
In the world of finance, everyone likes to talk about the power of compounding, but procrastination also has compounding effects. Procrastination on setting up retirement savings (or savings in general) has the same compounding effect as saving…in reverse. The longer you procrastinate, the larger the contributions necessary to meet the retirement number you need. Unlike my editor and this article, time does not provide grace for our procrastination. Time is relentless, and procrastination is a thief.
If you were to consider the potential earning power of your retirement account from the time you should have started saving versus your actual start date, you would see somewhere on average a 7 to 9% return per year. So, for a 50-year-old just making his first retirement contribution of $250, the potential earning power of that $250 over the 25 years since he should have started would be $1,462.12 with an 8% average return. In simple terms, procrastination stole $1,400 from the first contribution, and then each additional contribution added to that.
If that individual consistently put in $250 per month for 25 years, he or she would have deposited $75,000 by age 50. With compounding, the account would have $219,000, with $144,000 of earnings. Even at a 3% annual return, the potential loss of return on investment was $34,000 over that 25-year period.
The consequences of procrastination are significant, but you can take actions to mitigate those consequences, such as increasing your monthly contributions or delaying your retirement date to help build your savings. These are not a “magic bullet” by any means, but at least you have options to move forward. Breaking out of the procrastination cycle sometimes feels overwhelming.
Procrastination is prevalent in our daily lives, often for compelling, real-life reasons. Sometimes, grace can be given, like with an article, if it isn’t too late, but there will always be consequences for procrastination. Next time you are tempted to put off until tomorrow what should be done today, try the “3-2-1 rule.” Give yourself a countdown, then take the first step. When you need to “eat an elephant,” you must do it one bite at a time. But that first bite is important.
So, if you have been procrastinating, whether on saving for retirement or on writing an article, finish this sentence, then count down 3-2-1, and take the first step!
About the Writer: John Brummitt became director of Richland Ave Financial in January 2016. He graduated in 2011 with an MBA from Tennessee Tech University. A 2004 graduate of Welch College, John has served with Richland Ave Financial since spring 2006.
