Is Procrastination Killing Your Retirement Plan?

Let's face it; delayed gratification is not something that comes easily to most of us. Especially when the topic is retirement planning. Spending a dollar today that will provide some benefit to us today is just a whole lot more inviting and natural than socking that dollar away for a future use that could be decades down the line. So the rationalizations take over our thought process and we tell ourselves we can wait another day to save that dollar, or we just succumb to the all-too-human art of procrastination. Noted behavioral economist Dan Ariely pointed out in a recent interview with the Journal of Financial Planning that our natural battle with delayed gratification creates the perfect petri dish environment for procrastination to overtake our money management. "Procrastination is about our difficulty acting for the long term, yet financial planning is all about the long term," says Ariely.

Especially retirement planning. The issue isn't that we don't know what to do. It's about getting over the procrastination hump and getting it done. A few procrastination-busting steps to consider:

Set a Deadline, Keep it Short and Advertise it. Ariely recently recounted an experiment with his students where he gave them the option of deciding when during the semester they would hand in three required research papers. The big catch is that they had to tell Ariely early in the semester what their deadlines would be. Those that committed to earlier deadlines ended up with the better grades. Ariely's take on that outcome:

"It seems that simply offering students a tool by which they could pre-commit publically to deadlines can help them achieve their goals."

You no doubt have a retirement planning Been Meaning To list. Probably includes some mix of: rebalance the portfolio, run your numbers through a retirement calculator to see if mid-course corrections are needed, give Long Term Care insurance a serious look-see. To convert that list to "Done" go public with it. A sympathetic and supportive spouse might not be public enough to goad you into action. How about advertising your list and your deadlines to a good friend you know will hold you accountable, or post your plan on Facebook and commit to filing a progress report every week?

Guilt Yourself Into Action. Calculating the opportunity cost of not doing something can sometimes catapult us into action. Not the most pleasant of ways to motivate, but nonetheless effective. For example, instead of saying "I should have life insurance" ponder the ramifications of your dying without it in place.

Take Advantage of Procrastination-Circumvention Tools. Make the most of all the ways you can automate your retirement savings. Set up automated monthly deposits from your checking account into your IRA account. Nudge your employer to add an auto-escalation feature to the 401(k) plan so you can get some outside help boosting your savings rate every year. If your retirement plan offers automatic portfolio rebalancing, sign up for that as well. Haven't been able to get invested because you're a bit overwhelmed by all the choices? Okay, find the target date fund in your plan. Granted, each of these steps requires you to take action, but it's a one-time deal: If you can push through your natural proclivity to procrastinate and put the automation in place, you've just given your retirement plan a huge lift.

Photo courtesy of Flickr user manu contreras.

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