By Frank Legan

You may have heard the saying, “If you fail to plan, you plan to fail.” When it comes to your finances, that idea couldn’t be more relevant. Yet for many people, getting started with financial planning can feel overwhelming. Knowing where to begin, how to organize everything, or even finding the time to focus on it can be challenging. We understand.

But just because financial planning isn’t always exciting doesn’t mean it should be pushed aside. Delaying it can come with real costs, including missed opportunities, unnecessary stress, and even lost money over time.

If you’ve been putting off your financial planning, you’re not alone. The good news is that taking the first step today can help put you back in control. Here are five reasons why starting sooner rather than later can make a meaningful difference.

1. You Are 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 be sure it will be enough. 

If you plan to retire in your mid-60s, your retirement savings may need to carry you through 30-plus 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. According to the Fed, the median retirement savings of Americans ages 55-64 is $185,000, yet the average retirement cost is $83,379 per year, which means many individuals only have enough retirement savings to cover about two years’ worth of expenses.

A sound strategy 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. This is 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 aren’t alone. Healthcare costs in America are among the highest in the world. And as you age, you will likely require more healthcare services. According to the Fidelity Retiree Health Care Cost Estimate, the average couple at age 65 will need about $345,000 saved to cover healthcare costs in retirement. 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 few years and continuing inflation, it’s more important than ever to start preparing for the ever-increasing cost of care. The longer you wait, 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 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 help reduce your taxable income and ultimately can reduce the amount of taxes you owe. This strategy could help you save 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. 

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. Take Advantage of Compound Interest

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 invested as well. The money contributed to your retirement account each year can 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 up front. 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 may be 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 often see that some clients take a conservative approach that may limit growth potential over time. Depending on an investor’s goals and time horizon, incorporating additional risk may enhance long‑term growth

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 With a Clear Financial Planning Strategy

When it comes to financial planning, time is one of your most valuable advantages. The sooner you begin organizing your investments, taxes, and financial priorities, the more options you have to build your assets. Waiting too long often means fewer opportunities to position assets effectively or adjust your strategy before important financial decisions arise.

At Signature Estate & Investment Advisors, we aim to make the investment side of financial planning more straightforward by offering a selection of pre-constructed, risk-managed portfolios designed to help simplify the process of building and managing an investment strategy. Our goal is to help you stay focused on what matters most, while your financial strategy works quietly in the background to support the life you’re building.

To learn more about how we can help you move forward with greater clarity, reach out to us at 440-683-9213 or flegan@seia.com or schedule a complimentary introductory call online!

Signature Estate & Investment Advisors, LLC (SEIA), an SEC-registered investment adviser, notes that such registration does not imply specific skill or training; no contrary inference should be drawn. This material is provided for informational and educational purposes only and is not intended as individualized investment, tax, legal, estate planning or accounting advice, nor as a recommendation of any specific strategy, product, or course of action. Tax laws, regulations, and interpretations are complex and subject to change, and the information summarized herein may not reflect subsequent legislative or regulatory developments. The application of tax rules can vary significantly based on individual circumstances. Investors should consult with qualified tax, legal, or financial professionals regarding their specific situation before taking any action. Investment decisions should be based on a client’s individual financial needs, objectives, goals, time horizon, and risk tolerance. All investments involve risk, including the possible loss of principal.