Why do people wait so long before they finally start preparing for retirement? It is as if they suddenly woke up because someone splashed a bucket of cold water on their face. All of a sudden, the harsh reality of the need to have money when they retire wakes them up like a splash of cold water.
Imagine putting away a small amount of money for retirement ever since you were twenty years old. That would not be so hard, right? Now imagine if you waited until you were in your fifties in order to start putting away money for retirement. That would so difficult! You would have to start saving like crazy in order to get enough money in your accounts so that you can continue living like normal when you reach retirement age. In addition, says David Giertz, you will lose out on the power of compounding that would have been available to you if you would have started saving for retirement when you were younger.
Another problem that you will face if you do not start preparing for retirement on time, according to David Giertz, is that you will be more likely to take social security benefits as soon as you are eligible for them. While theoretically there is nothing wrong with that, the fact is that if you would have the means to wait at least two to three years after becoming eligible to actually take your social security benefits, your monthly social security checks will end up being larger every single month.
This is a big trick that not a lot of people are aware of! Some people know about this, but they are not motivated to wait another few years because they simply do not know just how much their paychecks will grow every month. The reality is that it can be by a few hundred dollars every month or even more! Over the course of a year, it can be several thousand dollars! This makes a huge difference when you are not working and do not have a regular income stream coming into your bank account.