The effect of procrastination and debt on retirement planning

Estate Planning | Jan 15, 2015 | Hook Law Center

The desire to create a comfortable, secure retirement is almost universal. Unfortunately, procrastination and debt can have a devastating, though not irreversible, effect on these efforts. While Americans can now anticipate longer-than-ever retirements with ever-higher costs of care, they tend to be less prepared for retirement than in decades past.

Procrastination can affect one’s retirement plans dramatically. The earlier people start saving for retirement, the less they need to save, and the more they will have when retirement comes. For example, to have the same balance at 65, a person who starts saving for retirement at 40 will need to save more than three times as much each month as a person who started saving at 25. Every year of procrastination can impact the security of one’s retirement.

Sadly, such procrastination is quite common. The savings rate in the United States hit a low point in February 2013 at just 2.6 percent — compared to a high of 11 percent in 1973. The majority of Americans have less than $25,000 in savings and investments, and 28 percent of Americans said they were “not at all confident” that they were saving enough for retirement.

Debt also threatens security during retirement. Levels of credit card debt, student loans and mortgage debt are all on the rise, including among people of retirement age. From 1989 to 2010, debt among people 75 and older increased by 978 percent, and debt among people aged 65 to 74 increased by 384 percent. Some older individuals must tap into their retirement funds to pay down credit card and other debt, which means that those funds will not be available later on.

Many Americans have so much debt that they are unable to retire when they would like to. Others are less secure in their retirement because of debt.

Debt and procrastination can have a devastating impact on retirement planning, but it is never too late to start working towards a good retirement. As the saying goes, the best time to start was yesterday, and the second best time is now.

The elder law attorneys at Hook Law Center assist Virginia families with will preparation, trust & estate administration, guardianships and conservatorships, long-term care planning, special needs planning, veterans benefits, and more. To learn more, visit or call 757-399-7506.

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