They say that procrastination is the thief of time but could it also be stealing you of a secure financial future? Here at Infinity, we believe that a sound financial plan usually includes the following elements:
- A retirement fund
- Health insurance
- Life insurance
- Critical illness cover
- Income protection insurance
Of course, it is very easy to put off thinking about your future finances and something that frightening numbers of people do. Just consider these statistics:
- According to figures from the Pensions Policy Institute, just 39% of working age men and 35% of working age women in the UK are accruing a non-state pension
- One in three Americans has saved $0 for retirement
- Only 5.7mn out of 26.4mn UK households had whole of life insurance in 2014
- Figures from the United States Census Bureau, show that in 2012 there were 48.0 million people in the US (15.4% of the population) who were without health insurance
That’s a lot of people procrastinating over their finances. So many of us put off making financial decisions today thinking we’ll do something about it when we need to. The problem is that when you need to could very well be too late.
Certainly, many of our clients wonder if they really need to bother with medical insurance or critical illness cover. They feel young, strong and invincible, as many of us do in our 20s and 30s, and yet lots of people in that situation find themselves needing to claim on insurance policies for any number of reasons. No-one wants to wake up in hospital after a car crash wishing they had got round to putting medical insurance cover in place or being prescribed months of rehabilitation therapy after a stroke and regretting having pushed critical illness cover down the list of priorities for months on end.
That wonderful time when you feel young, strong and invincible is exactly the time you should be taking out these peace of mind insurance policies. You will transfer all future risks to your insurer, benefit from the peace of mind that whatever happens you and your family you won’t suffer financially and, because you’re young and fit, your premiums will be lower.
Pension procrastination is another issue altogether. Often we put off saving because retirement just seems so far away. We think there are decades in which to save so why not live a little first? What happens so often though is that decades pass in the blink of an eye. Suddenly you’re in your forties and you still haven’t quite got your act together to start a retirement fund. Just think of all the compound interest that you have missed out on and how much money you now need to save per month as a result. The following graph clearly demonstrates the benefits of starting early:
I fully appreciate that your salary has to meet many demands but procrastinating over saving for your pension could mean you having to delay retirement or make big compromises when you retire. Far better to take the bull by the horns, get a grasp of your financial affairs and put in place the cornerstones of a sound financial plan which will guarantee you a rosy financial future. If you’d like help in doing so, why not talk to one of our financial advisers?
A leading provider of expat financial services and wealth management services across Asia.