The price of procrastination when planning for retirement

Robert A. Valente, CEO and Managing Member, RAV Financial Services

Fifteen months ago RAV Financial Services, LLC decided to provide our readers with timely insights and strategies to maximize your business growth potential and increase your overall net worth. During this time frame, we all have been bombarded by many headlines both domestic and abroad that may have distracted our focus on our journey towards financial success and ultimate life-plan significance:

  • U.S. economy sees the worst downturn since the Great Depression
  • Foreclosures hit record levels
  • U.S. deficits are out of control
  • Global terrorism on the rise
  • Afghan war now the longest in U.S. history
  • European debt crisis threatens economic recovery
  • Gas hits $4 per gallon and still rising
  • The U.S. political climate is bitter and straining the possibility of cooperation between parties

These are just a few of the stories that have caused consumers to remain “frozen” in the headlines. We have become so ingrained in the negativity around the globe, that we have remained stationary and have abandoned the issues that are “close to home”: to create and implement a successful strategic retirement plan.

Too often bad news reminds us that the “glass is half empty, not half full.” Other times we become angry, lamenting that we have no control over external events. Regardless of the environment, it may be appropriate to accept the events around you, and begin a plan to adjust and adapt to the “cards you have been dealt.” Next, focus on the things you can control as you build your retirement strategy. Individuals and businesses don’t plan to fail, they fail to plan. When a plan is non-existent, fear is created and magnifies what can go wrong. I learned a new definition a while ago about FEAR: false experiences appearing real. Fear immobilizes us and reminds us all of what Franklin D. Roosevelt said: “The only thing we have to fear is fear itself.” Emotional planning and knee-jerk reactions to short-term events can be dangerous to your long-term wealth.  A well-thought-out plan with your trusted advisor and wealth manager can help you crystallize the vision in your life-plan.

So what other statistics are increasing the difficulty of reaching retirement nirvana?

  • According to a recent poll conducted by Americans for Secure Retirement, 88% of all Americans are worried about “maintaining a comfortable standard of living in retirement.”
  • On January 1, 2011, the very first Baby Boomers started to retire. For almost the next 20 years, more than 10,000 Baby Boomers will be retiring every single day.
  • According to one recent survey, 74% of American workers expect to continue working once they are “retired.”
  • A recent AARP survey of Baby Boomers indicated 40% of them plan to work “until they drop.”
  • Per the Congressional Budget Office, the Social Security system paid out more in benefits than it received in payroll taxes in 2010. That was not supposed to happen until at least 2016. Sadly, in the years ahead, these “Social Security deficits” are scheduled to become absolutely nightmarish as hordes of Baby Boomers retire.
  • In 1950, each retiree’s Social Security benefit was paid for by 16. U.S. workers. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.
  • According to a survey by, 36% of all Americans say that they don’t contribute anything at all to retirement savings. (1)

In an article written by Michael Cohn, Small Biz Owners Not Prepared for Retirement, Cohn refers to a survey conducted by the American College:

“The survey, by the American College, a nonprofit educational institution devoted to financial services, found that while 66% of the women and 70% of the men said they had developed an estimate of their retirement needs, only half of these individuals have done so with the assistance of a financial professional.

Even for the small business owners who have calculated their retirement goals, most do not have a formal plan to achieve their financial objectives. Among the small business owners surveyed, 77% of the women and 74% of the men have no written plan for retirement.

Cost of living is a major issue for many small business owners planning for retirement. The main concerns of roughly four in 10 of the small business owners surveyed were increases in the cost of living, higher health care costs, and the ability to maintain their current quality of life.

While just over half of the small business owners who were surveyed reported being concerned about maximizing the value of their business to help fund retirement, only 10% of the women and 20% of the men polled had a written plan to transition their business upon retirement.”

There are many more examples in the media of individuals procrastinating to begin their retirement planning. Let’s get started in a serious commitment to get your retirement planning underway. The first thing is to do some homework. Create your personal current income and expense sheet. We’ll use that in my next article to examine what information is unveiled to you as you examine where money comes from and where it goes today. Remember, when you’re retired, how will that income/expense picture change. We’ll elaborate on that more next month.

In the meantime, I wish you financial well-being and comfort during these taxing times.

Robert A. Valente, CFP®, AEP®, is CEO and Managing Member of RAV Financial Services LLC. He can be reached at [email protected]

(1) Excerpts from “The Economic Collapse : Are You Prepared For The Coming Economic Collapse And The Next Great Depression?” November 23rd, 2011

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