5 Reasons Not to Put Off Financial Planning

By Brett Gottlieb

If you struggle with procrastination when it comes to organizing your finances, you’re not alone. Whether it be insurance planning, filing taxes, or putting together an estate plan, most people don’t find the nitty-gritty of financial planning the most exciting of topics. In fact, most people find it overwhelming and boring. And that’s okay.

But just because managing your finances isn’t how you want to spend your spare time doesn’t mean it shouldn’t be done. Putting off these tasks can be costly—in time, energy, and money. If you’ve been putting your financial plan on the back burner, consider these 5 reasons why you shouldn’t.

1. You’re Probably Not Saving As Much As You Should

The first reason you shouldn’t put off financial planning is that you’re probably not saving as much as you should. That’s not to say that the savings you do have shouldn’t be celebrated. But no matter the amount you have, you need to make sure it will be enough.

If you plan to retire in your mid-60s, your retirement savings may need to carry you through 30+ years. Not to mention rising inflation that will decrease the value of your savings over time and the additional expenses you will likely encounter along the way. A study by the Center for Retirement Research estimated that the media retirement savings of Americans age 55-64 is $120,000,^[1] yet the average retirement cost is nearly $46,000 per year!^[2] At that rate, a savings of $120,000 will only last 3-4 years.

The best way to help avoid running out of money in retirement is to work with a financial professional to understand what your savings can handle. Contrary to popular belief, you cannot use a multiple of your annual income to determine how much to save. There is no simple fix, that’s why it’s so crucial to plan ahead. The sooner you understand your need, the more options you will have and the easier your goals will be to accomplish.

2. Healthcare Costs Are on the Rise

If you’ve ever held a hefty medical bill in your hand, you know the stress healthcare expenses can cause. Healthcare costs in America are among the highest in the world.^[3] And as you age, you will likely require more healthcare services. According to the Fidelity Retiree Health Care Cost Estimate, the average couple retiring at age 65 in 2021 needed about $300,000 saved to cover healthcare costs in retirement.^[4] Most people don’t even have that much in their retirement accounts to live on, let alone cover medical costs.

Given the events of the past two years, it’s more important than ever to start preparing for the ever-increasing cost of care. The longer you wait, potentially the less options you’ll have. Working with an experienced professional can help you evaluate your options and build a long-term plan for healthcare.

3. Tax Strategies Take Multiple Years to Implement

Another reason not to put off financial planning is that if you don’t start early, you’ll miss out on several tax strategies that could take years to implement, including:

Tax-Advantaged Retirement Savings

If you’re in a high tax bracket, being able to save for retirement with pre-tax dollars is a great advantage because pre-tax contributions reduce your taxable income and ultimately reduce the amount of taxes you owe. This strategy could save you thousands of dollars in taxes each year. The earlier you start, the more you’ll save over the course of your career.

Roth Conversions

Roth conversions help to increase your retirement savings and decrease your long-term tax liability by transferring funds from a pre-tax retirement vehicle (traditional IRA) to an after-tax account (Roth IRA). This allows your money to grow tax-free for as long as you’d like, and required minimum distributions (RMDs) are avoided as well. Roth conversions are taxable events, so it’s important to talk with your CPA if a Roth conversion is something you might be interested in.

Withdrawal Strategies

When it comes to withdrawing from your retirement accounts, how you take your distributions can make all the difference. Each retirement asset (employer-sponsored accounts, Social Security, traditional IRAs, etc.) has different tax characteristics. Creating a withdrawal strategy can help lower your tax burden by structuring withdrawals from each income source in a tax-efficient way.

To properly implement these strategies and more, a long-term understanding of your full financial picture is required. Putting off financial planning can leave you stuck with a huge tax bill that could have been avoided.

4. Compound Interest Takes Time

Just as saving early allows you to take advantage of massive tax savings over time, there is a compound effect that occurs with the money that is actually invested as well. The money contributed to your retirement account each year will grow exponentially over time, but the key part of that equation is time.

A single penny that doubles every day for a month may not seem like much on the surface, especially when compared to $1 million upfront. But by the time the 30th day rolls around, you will have over $5 million in pennies. This same concept can be applied to your retirement account, but because retirement investments are at the mercy of the highs and lows of the stock market, it will take more than 30 days to see that kind of growth.

If you wait to invest, you are missing out on growth year after year, and the resulting loss of earnings can be substantial. Not to mention the potential for loss when you try to invest yourself without the proper advice and guidance of a professional. We’ve found that many clients are often invested too conservatively and miss out on the opportunity for significant growth in even just a slightly riskier portfolio.

5. Financial Planning Can Alleviate Stress

Do you feel 100% confident about the myriad of financial choices you make day in and day out? Have you encountered more complexity as your assets have grown? Partnering with a financial professional can help alleviate the stress and anxiety that comes from trying to figure out your finances.

Think about all the time you spend worrying over finances and whether you are saving enough money. Are those thoughts preventing you from making great memories and actually living your life? For many of our clients, the answer is yes. But it doesn’t have to be that way.

Financial planning can help alleviate the stress that comes from not knowing where you stand or how to achieve your goals. It can provide clarity by defining a path from point A to point B, and allowing you to get the most out of your life along the way.

Get Started Today

As you can see, there are many reasons to start the financial planning process sooner rather than later. If you have long-term financial goals like buying a house or saving for retirement, working with a professional is one of the best things you can do to set yourself up for success. Don’t leave your most important goals and priorities to chance. At Comprehensive Advisor, we will build a custom plan to put your money to work for you, so that you have the potential to feel confident in your financial future. Email us at info@ComprehensiveAdvisor.com or call (760) 813-2125 to get started today.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly 20 years of combined insurance and investment experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

With a combined experience of over three decades in the financial services industry, our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial solutions for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Neither the firm nor its representatives may give tax or legal advice. Comprehensive Advisor, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Comprehensive Advisor, LLC are not affiliated companies. C.A. Financial & Insurance Services, CA Ins. Lic. #6000262. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc. generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Please remember that converting an employer plan account to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including (but not limited to) a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.  1197554-01/22

^[1] https://smartasset.com/retirement/average-retirement-savings-are-you-normal

^[2] https://www.financialsamurai.com/the-average-spending-amount-in-retirement-is-surprisingly-high/

^[3] https://www.investopedia.com/articles/personal-finance/072116/us-healthcare-costs-compared-other-countries.asp

^[4] https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs