How procrastination can ruin your retirement planning
Many of us procrastinate sometimes – even the most productive people, apparently!
But when it comes to saving for retirement, procrastinating is not advised. Early birds don’t just get the worm - they get five star buffets for almost no effort.
The real cost of procrastination calculated
Let’s illustrate the cost of procrastination with a story of three fictional couples.
In each case, these couples have always earned the same as the typical UK household.
For example, based on data from the Office for National Statistics they had £6,444 of disposable income per head in 1977. In 1982, they had £7,435 of disposable income per head. By 1987, they had £8,565…
These couples are all the same age…
The key difference between them is, they didn’t all begin to save for their retirements at exactly the same time.
In 1977, Sam and Kate were 25 years old. They decided to save £175 per month (£2,100 per year). It would have represented 16.29 percent of their annual income.
They bought low-cost mutual funds, putting 70 percent of their money in stocks, 30 percent in bonds.
The couple’s funds matched the returns of each respective market. In other words, and for the sake of this illustration only, their stock market mutual funds matched the S&P 500. Their bond market funds matched the performance of a broad US government bond index.
But Sam and Kate were lazy!
As their income increased, they didn’t increase what they invested. They just continued to add the same £175 per month.
By 1982, their income had increased to £14,870 per year. As a result, their investment of £175 per month no longer represented 16.29 percent of their income. It was now just 14.12 percent.
By 2007, that same £175 per month represented a paltry 7.47 percent of what they earned.
By 2007, the other 2 couples were investing a lot more money than Sam and Kate.
But that didn’t matter. These 2 early birds still soared higher.
According to portfoliovisualizer.com, they would have had about £1 million by the time they were 65 years old without ever increasing the monthly amount they invested.
Stuart and Lisa live next door to Sam and Kate. They didn’t start to invest until they were 35 years old. They invested £600 a month (£7,200 per year) in 1987.
It represented 42.03 percent of their disposable income – ouch.
But, by scrimping so hard, by the time they were 65 years old, they also had about a million pounds.
Stuart and Lisa had to save much more than Sam and Kate. As a result, they weren’t able to spend as much of their income on the finer things in life.
When Sam and Kate asked Stuart and Lisa to join them for a South African safari, they couldn’t afford it. Their monthly retirement savings ate up far too much of their income.
However, at least they were doing much better than David and Sarah!
This couple only began their retirement planning when they were 45 years old.
At age 65, they also had a £1 million portfolio - but to reach that goal, they had become slaves to their savings. The couple saved a whopping £1,800 a month (£21,600 a year).
Such savings represented 92.79 percent of their disposable annual income. That’s why, to reach their retirement goal, they had to rent out their home and live in their car!
Of course, these are just fictional examples. But the numbers are real! We used actual investment returns between January 1977 and July 2017.
The lesson here is massive – yet simple!
If you procrastinate about your retirement planning and start to invest later, you’ll have to save a lot more money to reach your ideal future.

For example, Sam and Kate began to invest in 1977. They would have saved a total of about £84,000 to amass £1 million.
Stuart and Lisa started to invest 10 years later. They would have invested about £216,000 to reach a £1 million portfolio.
David and Sarah didn’t invest until they were 45 years old. As a result, they had to save about £432,000 to reach their million-pound milestone by age sixty-five.
If they had started to invest ten years later (at age 55) they wouldn’t have reached that goal – even if they had invested every single penny they earned!
We are not saying you need £1 million to retire. But just to show you the power of investing early and the pain of procrastination.