The Greatest Financial Risk of All

When financial professionals define the different kinds of investment risks, they may talk about market risk, or inflation risk, or the loss to principle risk. They may also talk about purchasing power risk and liquidity risk. But most financial professionals don't mention the only risk that is truly deadly. It is the risk of doing nothing. Doing nothing literally is the primary reason that many people have inadequate money in retirement. It's the risk of not getting started—not having enough time to grow your money.

My clients who are assuming this risk say things to me like, "When I get the car paid off, Ruth, then I will be able to put it into my 401K plan." Or, "When we are done paying for little Johnny's daycare, we'll have a lot of money to put away for retirement." But then of course, after daycare there are still expenses for Johnny, and finally I hear, "When Johnny finishes college, then we'll really be able to get started on investment planning." Sound familiar? Other than child expenses, the most frequent reason I hear from clients for not getting started in saving for retirement is, "When we get the credit cards paid off—then we'll be able to get started."

When you don't get started, you “lose by default” the possibility of a healthy retirement. You, too, may have convinced yourself that children and debt are valid reasons for assuming the risk of losing by default.

One of the most important things I have learned in the 21 years I've been a financial consultant, is that men and women don't actually start investing money because something changes in their lives. A person doesn't start putting money away for the future because a credit card gets paid off. Because after the credit card gets paid off there is always something else that needs the money today—instead of putting the money away for the future. It's called the cost of life—there's always something that needs money—a house, a car, a child, a business—always something.

So, sit down with your budget—both your personal budget and your business budget. And decide where and how you will make changes in your lifestyle and adjust your budget so you can start putting away some money—even a little—now!

The only way to reduce the risk of “losing by default”—is to decide to get started today. If you wait—you are accepting the biggest financial risk you can—the risk of doing nothing—not getting started in time.