What is your next move going to be? Everyone wants to get in better shape, especially as we get older. But for some reason we have trouble taking the right steps in getting started, even though the mirror reminds us every day of our goals (sometimes that mirror also reminds us that the older we get, the harder it is!). The same applies to retirement planning, except that in this case, there is no mirror to remind you about it or keep you encouraged when you start to make progress.
Every time I write an article like this, I receive many calls from people who have been meaning to make important changes to their accounts, but haven’t gotten around to it yet or just don’t know where to start or who to turn to. Time flies! Instead of waiting until tomorrow to start working out your retirement planning muscles, you need to take action, no matter how small that first step is.
Of course, we often procrastinate on losing weight for the same reason we procrastinate on retirement planning: we avoid pain at all costs. You know you need to do it, but you just don’t. For a lot of people, it feels overwhelming to think about the big goals because they come with a lot of worries and anxiety.
So, try thinking about it this way: If you’re reading this, you probably already know a lot about what you should be doing. Diversify, make sure your risk levels are appropriate to your strategy, manage the downside, and keep on top of your portfolios – or make sure your advisor is doing this for you.
To get past the mental roadblocks and start the process, try the 15 minute strategy: All you need is 15 minutes to pick up the phone and call your advisor, to get online and check out your allocation. If you still have a 401(k) at an old employer, find out how to roll it over into an IRA. Pick one small task to do, and you can build on that.
You’re Not Alone!
I want to give you a couple of examples of smart people, who are probably a lot like you, who got caught in the procrastination trap.
I had a new client who came to me with an IRA rollover account. At the time of the rollover, her former advisor recommended she purchase an annuity. Because of market conditions, she wanted to keep that money in cash for a while. However, procrastination set in and she never moved her assets into equities, and she was never advised to do so. So, for 13 long years, the annuity charged annual fees of close to 1.5 percent on the account, meaning that this person was guaranteed to lose money every single year with no chance of growth! My new client had known on some level she was not getting the advice she needed, which is why she eventually came to me, but taking the step of making a change seemed difficult. She put it off for a long time, which ended up costing her a lot of money.
Another investor who read a few of my articles sent me a list of his holdings and asked me to take a look. This was another simple situation from an investing standpoint: His portfolio was concentrated in a few sectors of the market, so it was grossly underperforming its benchmarks. We talked about his allocation, and made some simple changes to expose him to a wider spectrum of the market. I believe that our 10 minute conversation put him on a better path towards long-term performance, and he was surprised at how easy it was and how much better he felt afterwards! The low-grade worry about his allocation had been adding stress to his life for years.
There are many more examples that I could share with you; however, in both of these cases, the solution came because these people made a decision to pick up the phone and ask for help. And once that was done, making the changes they needed was easy and left both clients feeling much better and more confident about the future.
The Benefit of the Right Advisor
Let me bring you in on a little secret: The best thing about having a trustworthy and competent advisor is that they will keep an eye on you and prevent you from getting too lazy or emotional in your investing. They are the personal trainers of retirement planning. An advisor is the influence that prevents you from leaving retirement planning for another day… or another year. And just like a personal trainer, you should make sure that you have one you feel comfortable with.
Of course, unbiased advice, a solid knowledge of the market, and an understanding of how different investment products might best suit different situations are also critical, but it’s that ability to help you over the psychological roadblocks that can make the difference between a good advisor and a great one. So, if you’re struggling to get your retirement house in order, consider it. And remember that taking control and seeking advice isn’t just about retirement assets, it’s about your non-retirement accounts as well!
For now, just take one small step today for your retirement planning. Whether it’s getting the paperwork you need to set up an IRA rollover, adding a few percentage points to your 401(k) paycheck deduction, or just checking the performance of your account relative to the market, just do one thing that will help you on your way. It’s amazing how quickly those little steps, taken over time, can add up to great things!
photo credit: Alejandro Hernandez. via photopin cc
To learn about retirement savings, download my free eBook, “10 Tips You Need to Know About Your IRA Rollover.” This short book is packed with critical information that will help you make the right decisions about your retirement savings.
Written by Bradford Pine
Bradford Pine Wealth Group – New York City Financial Advisors
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