If there were a pill to cure procrastination, how many of us would wait and take it later? When it comes to money, delay can come with a heavy price. Here are three financial moves that most people postpone with significant risk.
1: Estate Planning
Planning for your debilitation and death is not an activity one engages in for the great joy it brings. Even the masochist touches these themes sparingly. However, these legal documents are important to a degree that cannot be overstated.
A Last Will and Testament, Power of Attorney, and Advance Healthcare Directive should be in place for everyone aged 18 and older. A trust often becomes prudent with the purchase of a home or business. Estate planning reviews should take place every five years and at every major life event. Please, stop delaying the implementation of estate planning recommendations. They protect your family, your wishes, and your wealth.
2: Funding Retirement
The time has come to contribute 15% of your gross income to retirement accounts. It’s so easy to say you’ll increase your contributions later, but that comes at a cost far greater than you may realize. We all know that paying yourself first can require sacrifice, and it is vital to financial success; this means allocating 15% to your retirement accounts.
Maximize your 401(k), fully fund your IRA, implement back-door Roth conversions—there are many avenues to fully fund your retirement accounts. Do not neglect this important financial step. Your future self will thank you.
3: Rebalance
Risk analysis is another crucial step in ongoing financial planning that is repeatedly neglected. Too often, individuals invest aggressively and then fail to dial risk back as their circumstances change. Rebalancing as allocations drift is essential, yet frequently overlooked, and those oversights raise the odds of losses when markets turn.
Conversely, some investors become skittish at perceived increases in market risk and mistakenly move into more conservative allocations. Not knowing when to move back to target benchmarks, they stay underexposed for too long.
Risk analysis should be performed annually. How well does your portfolio align with your risk tolerance and financial goals? Now is the time to have a clear answer.
If you’re unsure how to implement these financial recommendations or what else may be missing from your financial plan, don’t delay meeting with your financial advisor, and don’t procrastinate acting on the guidance you receive.
Go to the podcast below for a deep dive.
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