By Jon L. Ten Haagen, CFP ®
We are about to start another new year and along with that we make all kinds of resolutions that this year you are positively, definitely and absolutely going to jump on and stay with it. Yeah, right. How about this year do something different: Get back on track, or just get on track. It is your life and your future retirement. You are the only one who can control the end result. Are you ready to get serious? You can wait until the final hour (11th hour) to get started, however, I think you will not have enough time to accomplish what you envision. Think of all those times you waited until the final moment and how pressured you felt and the number of mistakes you made because of the last minute pressures. How about trying it a different way?
Most of us are long-term procrastinators. The problem is that, eventually, not getting started catches up to us. We know we should get going on a financial plan for retirement. We know we should also save for a house, college education and an emergency fund. We occasionally think about it, however, something gets in the way, like a vacation, a big date, a new car we can’t afford right now.
Here are some interesting statistics that might get you thinking: People pay about $12 billion per year on credit card fees. Also, over 90 percent of households do not meet conservative retirement savings objectives for their income and age groups. A study done two years ago shows retirement savings in the U.S. are scary low.
There are at least five areas of financial procrastination. The first is not filing taxes on time. The penalties mount up day after day when taxes are not paid past the deadline. Next is procrastination on big financial decisions, not starting investing for the future, ignoring market changes and missing opportunities in the markets by not paying attention, and not getting around to organizing your financial items. Do you at least once a year review and see how you have fared against market indexes? Are you invested totally in the equity markets vs. being well diversified? There are pluses and minuses for both types of investment styles. However, if you do not pay attention and do not work with a certified financial planner (CFP), you may get in trouble by not staying on top of things.
Consider the compound annualized return on the S&P500 (an index of the 500 biggest stocks on the exchange) for the 30-year period from July 1979-July 2009 was 10.75 percent; for the 20-year period from July 1989-July 2009 it was 7.76 percent. Long-term government bonds returned 9.46 percent annually for the 30-year period beginning July 1979, and 8.55 percent for the 20-year period starting July 1989.
If we assume an 8-percent rate of return in the above example, the delay of starting 10 years later, the cost of procrastination is over $95,000 which could have been in your pocket toward your retirement years.
Bottom line is time is money in the case of your finances and investments. How about in 2017 you do get started and consult with a professional on your best course of action for your specific needs? The University of Chicago research found the key to financial success is “getting started.” If not now, when? It only takes a few minutes to get started. The results will make you very happy and comfortable in your future financial success.
The very best of the holidays to you and yours. We stand ready to give you a no obligation second opinion. Try it. You will like it!
Huntington’s Jon L. Ten Haagen, CFP, runs Ten Haagen Financial Services, Inc., a full-service independent financial planning firm, and he is here to answer your questions. In this bi-monthly column, Ten Haagen will answer your financial questions and help you with his expert financial advice. Don’t be shy, our expert is here for you, so feel free to ask away! Email your questions to email@example.com today, and let our expert help you.
*Ten Haagen is an Investment Advisor Representative offering securities and advisory services offered through Royal Alliance Associates, Inc., member of FINRA/SIPC, and a registered investment advisor. He is also an active community member, serving on several nonprofit boards and as executive officer of the Greater Huntington Boating Council.
**BACK IN HUNTINGTON: The offices of Ten Haagen Financial Services, Inc. have moved back to 191 New York Ave., Huntington. Friends and clients are welcome to stop by, check out the new office and share a cup of coffee with the expert!