The Cost of Waiting to Save for Retirement

The Cost of Waiting to Save for Retirement

When you are in the later stages of your career, retirement might be the furthest thing on your mind. It’s no wonder, as many other financial priorities are likely competing for your time and attention.

At this point, many people are thinking about how they will help their kids pay for college. For others, it’s about assisting their aging parents with costly health expenses. Or perhaps paying off debt is top of mind.

But retirement can creep up quickly. For some folks, it can be sooner than they think, whether via a forced early retirement or a layoff that makes it hard to find another job.

What Could Happen If You Wait to Save?

The cost of waiting to save for retirement until later can add up in many ways. It ranges from simply not having enough income to being forced to depend upon your loved ones for support.

That is why it pays off to start saving as early as you can. And if you haven’t really started putting away money for retirement yet, now is a good time to begin. You might even consider talking to a financial professional who can run some numbers for you and help you find ways to catch up on savings.

Of course, paying off all of your debts does help you with retirement planning in a sense. Paying off just your mortgage before you retire will allow your retirement money to last longer than it could otherwise.

Just be sure that you still have enough retirement savings on hand to sustain you through your non-working years. To be clear, this is about finding the right balance between saving and wiping out the red ink.

Your financial advisor can help you walk through this and other crucial questions as you plan ahead.

How Much Can Waiting to Save for Retirement Cost You?

Here are some examples of just how much putting off saving for retirement can cost you.

Say that Joe is 25 years old and just got a master’s degree in computer engineering. He immediately opens a Roth IRA and puts away $5,500 per year in the account for the next 40 years.

Assuming that his investments have an average return of 7% per year, he will have $1,097,993 by the time he turns 65. On the other hand, if he waits until age 30 before he starts saving — just a 5-year difference — then he will only have $760,303.

That five years cost him a whopping $337,690!

In other words, the cost of waiting to save for retirement could be as much as six figures or greater, depending on how long you wait to begin.

What Else Can Shake Out?

Apart from just a difference in savings, there could be other effects from waiting until late in the game.

Having to Work Longer

One of them could be that you simply run out of income after you retire. Should this happen, you might have to work longer than you had originally intended.

The age at which you are entitled to 100% of your Social Security benefit is your full retirement age. If you were planning to retire early or at your full retirement age, you may then have to wait until age 70. That way you could qualify for your maximum benefit and also have more time for your money to grow.

In fact, you may even have to work past 70 if your savings are too few to support yourself. But working longer may not be a viable choice if your health is changing or you become unable to perform your job duties. This can be quite a dilemma if there are no viable alternative options.

Becoming Financially Dependent on Others

What is another situation that can arise?

You might end up as a financial burden to your friends or family members. That could strain your relationships with them.

What’s more, your family or friends might not have the resources to support themselves, whether then or later. If you end up having to live with your children or grandchildren, that can be unappealing in a number of respects.

If your ability to get around changes, they may have to modify their homes in some ways. Showers, staircases, and front porch steps may have to be altered, and those can be very costly in various cases.

Most people don’t want to wind up in this sort of situation with their loved ones or friends.

Canceling Long-Held Retirement Goals

Another risk? Having to drastically change, or even cancel, big plans you had dreamed of for your retirement.

Take, for instance, how many retirees want to travel after they stop working. They would like to visit distant lands, go to natural parks across the country, tour museums, enjoy famous attractions, or just get out and see the world.

However, Social Security alone won’t give you much to do everything that you might like. In fact, it might not be enough for you to live on by itself. In short, you may not be able to enjoy the finer things in life as much as you would like if you haven’t saved enough.

Downsizing to a much smaller home may be in the cards. Instead of having your own car, you may have to settle for public transportation to get around. Nor might you be able to live where you had dreamed of living in your retirement plans.

Changing Personal Health

Another factor to consider is relating to health and well-being. Not having enough money is enough to stress anyone of any age out. But it can be especially so for people in retirement, when they don’t have as much time in front of them to turn their situations around.

This can lead to additional health problems, which might lead to high-cost healthcare needs or other major life changes.

Start Planning Ahead for the Future

Are you playing catch-up on your retirement saving? One obvious step is to begin squirreling away more money in your retirement accounts.

Putting away money in a traditional IRA, a 401(k), or your workplace retirement plan allows your money to grow and compound at a faster rate. Taxes generally wouldn’t be due on the money until you had started withdrawing it.

Your financial professional can also help you look at other options to build your retirement nest egg. These options can be tailored to how much more you need to save, your personal risk tolerance, and how much risk is appropriate to help your money grow more.

You don’t have to get discouraged about the prospects of saving for retirement or enjoying a comfortable lifestyle once you have left your career. Consult your financial advisor for more information on saving for retirement and how you can avoid the dilemmas described above.

If you are looking for someone to help with your personal situation, many independent financial professionals can help you here at They understand the unique nuances and challenges of retirement income planning. They can help you determine various paths forward to meet your goals.

Use our “Find a Financial Professional” section to connect with someone directly. You can request an initial appointment to discuss your goals, concerns, and situation as well as explore a working relationship. Should you need a personal referral, please call us at 877.476.9723.

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