Some financial analysts describe people that don't save and delay planning for retirement as facing the "retirement postponement syndrome" or RPS. Many of these procrastinators hope that something magical will happen to boost their savings, but usually they end up desperately scrambling to save as they get older. (For more, see The Top 4 Reasons To Save For Retirement Now.)

IN PICTURES: Retire A Millionaire In 10 Steps

The people trapped in retirement postponement syndrome are often in debt or overly extended from paying their children's college tuition and mortgage payments. In fact, a 2006 Consumer Federation of America and Financial Planning Association survey revealed that only 10% of people expect to save a million dollars in their lifetime, 11% hope to inherit money and 21% are depending on winning the lottery. Only 55% said saving monthly was the best route for a sound retirement.

Too many people act like Scarlett O'Hara in "Gone with the Wind" who saw her life crumbling but said, "I'll think about it tomorrow." But one financial expert noted that "No one at age 65 ever complained that they've saved too much."

People who take steps to place their financial life in order can avoid RPS and plan for the future if they control their spending and save regularly. Here are five steps for avoiding retirement postponement syndrome:

IN PICTURES: 6 Millionaire Traits That You Can Adopt



Assess Your Financial Situation

Analyze your financial portfolio. How much have you saved, and how much are you in debt? What is the status of your cash flow, income and expenses? What changes can you make, and what can you cut back on? If you're unsure of finances, work with an expert, a financial planner or CPA to start developing a plan for the future.

Start Saving

Given the choice between saving and buying a dress or a flat screen TV, most people opt for the immediate gratification of material goods. To ensure savings, take advantage of any company's 401K plan, which builds automatic deposits by deducting a percentage of salary from your paycheck. If you're self-employed, create your own SEP-IRA savings plan. (To learn more, see our SEP IRAs Tutorial.)


Create a Master Savings Plan
If you live to age 70 and beyond, how much money will you need? Devise a monthly, long-term plan to save and try to defer taking social security. The longer you delay tapping social security, the more money you obtain. Living below and not beyond your income is the secret to saving.


Use Compounding to Build Savings
Start saving in your 20s and watch your money grow. Financial planners note that an 18-year old who save $20 a week or $1,000 a year and invest in the stock market, which averages 10% return a year (on average), can save a million dollars by the time they turn 65. If they start at thirty, consumers must save $67 a week and at forty, $188 a week to reach a million dollars. Starting to save early can maximize the effects of compounding, which multiplies your money based on returns. (To find out how much you need to save, check out our Millionaire Calculator.)


Tap the Three Factors to Success
Financial experts say investors have three factors in their favor: time, rate of return and the amount saved. If consumers stay out of debt and begin to save, they can watch their money grow. Time is an investor's best friend.

The Bottom Line
You don't have to be in the top 2% of wage earners to start saving for retirement. For example, one couple in their thirties - one a firefighter and the other a nurse - together earned about $100,000 annually. They spent $35,000 a year, paid $15,000 in taxes and saved $50,000 a year. At a normal rate of return, the couple can amass $2 million before they turn 50. It's not what you earn but what you save that determines effective retirement planning. The moral: people who save a portion of their income can become millionaires even on a middle-class income and avoid the retirement postponement syndrome. (To learn more, check out 10 Steps To Retire A Millionaire.)

Find out what happened in financial news this week. Read Water Cooler Finance: Barack Obama Vs. The World.

Related Articles
  1. Mutual Funds & ETFs

    Top 3 PIMCO Funds for Retirement Diversification in 2016

    Explore analyses of the top three PIMCO funds for 2016 and learn how these funds can be used to create a diversified retirement portfolio.
  2. Investing

    How To Make Sure Your Healthcare Costs Do Not Ruin Your Retirement

    The best proactive plan of action for a stable retirement is to understand medical costs, plan ahead, invest properly, and consider supplemental insurance.
  3. Investing

    7 Creative Ways to Save for an Early Retirement

    Take note of these out of the box steps you can take towards securing yourself an earlier, more comfortable retirement.
  4. Products and Investments

    Cash Value vs Term Life Insurance: Which is Best?

    The debate between cash value life insurance and term insurance plus an investment plan is an ongoing one. Here's a look at both sides of the argument.
  5. Personal Wealth & Private Banking

    What People Hate About Financial Advisors

    Advisors need to make a living too, but doing so by cutting corners at a client's expense isn't right. Here are the top complaints against advisors.
  6. Mutual Funds & ETFs

    The Top 3 Oakmark Funds for Retirement Diversification in 2016

    Learn about what makes Oakmark Funds desirable for retirement investing. Read about the top three Oakmark funds to research for retirement diversification.
  7. Retirement

    How Medicaid Works After Retirement

    Reasons why, after you retire, you need to know how Medicaid works – and especially how it relates to Medicare.
  8. Your Clients

    Top Tips to Transition into Retirement Confidently

    Here are some of the best ways to make the transition to retirement painless.
  9. Retirement

    When to Fire Your Advisor and Go Robo-Advisor

    Human financial advisor or robo-advisor: Which suits your needs best? Here are some general tips to help guide you to the right professional.
  10. Investing Basics

    When Low Volatility Funds Make Sense for Retirees

    Low volatility investments let you “smooth out” the market's day-to-day or month-to-month choppy waters. But is a smooth ride the best choice for retirees?
RELATED FAQS
  1. Am I losing the right to collect spousal Social Security benefits before I collect ...

    The short answer is yes, if you haven't reached age 62 by December 31, 2015. The Bipartisan Budget Act of 2015 disrupted ... Read Full Answer >>
  2. What is the maximum I can receive from my Social Security retirement benefit?

    The maximum monthly Social Security benefit payment for a person retiring in 2016 at full retirement age is $2,639. However, ... Read Full Answer >>
  3. Are target-date retirement funds good investments?

    The main benefit of target-date retirement funds is convenience. If you really don't want to bother with your retirement ... Read Full Answer >>
  4. Will quitting your job hurt your 401(k)?

    Quitting a job doesn't have to impact a 401(k) balance negatively. In fact, it may actually help in the long run. When leaving ... Read Full Answer >>
  5. How does my spousal Social Security benefit work?

    If you have never worked or paid Social Security taxes, you will not be eligible to receive Social Security retirement benefits ... Read Full Answer >>
  6. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
Trading Center