Last reviewed: September 2026
Money avoidance costs the most for the people who can least afford the lost years: pre-retirees inside the narrow Roth conversion window before required minimum distributions begin, and business owners whose eventual sale price depends on decisions made now, not later. Jeff Judge, CFP®, has a name for the specific stretch where this starts: the six-month freeze, the period right after a job change, a windfall, or a slow year in the business when a client quietly stops opening the mail on one account and never restarts. The dollar cost of that freeze is calculable, and it is usually larger than the client expects once someone actually runs the numbers with them.
Key Takeaways
- A 1% higher 401(k) fee can cut a $25,000 balance by 28% over 35 years, according to the Department of Labor.
- Maryland residents 65 and older can exclude up to $40,600 of retirement income in 2026, though the exclusion phases down against Social Security.
- The 2026 IRA contribution limit is $7,500, plus a $1,100 catch-up after age 50, for a combined $8,600, per the IRS.
- Waiting for a better time to review an old account rarely lowers the eventual cost; it only extends how long the drag compounds.
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has worked with families and business owners across Harford County and the Baltimore metro area on money avoidance and delayed financial decisions since earning his CFP® certification in 2013, using Chesapeake's signature process, the R.U.D.D.E.R. Method™. "The clients furthest behind are rarely the ones who made a bad call," Jeff says. "They're the ones who quietly stopped making calls at all."
Why Does Money Avoidance Feel Different From a Bad Decision?
Here is the belief most people hold without ever saying it out loud: if I have not made a bad decision, I have not lost anything. The old 401(k) is still sitting there. The Roth conversion I keep meaning to look into is still an option next year. Delay feels like a pause button, not a line item.
It is not a pause. It is a decision made by default, and it carries a price. Jeff Judge has watched this pattern repeat with dozens of clients in their thirties and forties. "The account is rarely the problem," he says. "The gap between deciding to look at it and actually logging in is where three or four years quietly disappear."
The mechanism is specific. Absence of action does not announce itself as a choice, so it rarely triggers the alarm a bad decision would. Nobody circles a date on the calendar for "the day I didn't check my 401(k) fee." The old plan just sits there, the window just closes, and the emergency fund just stays too thin, one unremarkable week at a time.
Is Delay Really a Neutral Choice?
No, delay is not neutral, even though it feels that way in the moment. A missed Roth conversion window in a low-income year does not roll forward to next year; that specific opportunity is gone for good. An unreviewed 401(k) with a high expense ratio keeps charging that fee every single quarter whether or not you have looked at the statement. The absence of a decision still produces an outcome, and that outcome compounds the same way an active mistake would.
What Does an Unreviewed 401(k) Actually Cost You?
Take a $25,000 balance sitting in an old employer plan with a target-date fund that costs a full percentage point more than a comparable index option. That is a common, unremarkable situation. According to the Department of Labor, a 1 percentage point difference in annual fees on a $25,000 balance, over 35 years at a 7% average return, reduces the account's ending balance by 28%, from roughly $227,000 down to about $163,000, with no further contributions at all.
Nobody made that decision on purpose. Nobody sat down and chose the higher-cost fund. The fee difference sat there quietly, compounding, because the account went unreviewed after a job change.
"None of my clients who fall behind made one dramatic mistake. They just stopped making calls at all, and the absence compounded the same way a bad decision would have."
Jeff Judge, CFP®
| Years the fee difference runs | Approximate impact on a $200,000 balance* |
|---|---|
| 5 years | Modest drag, often under $10,000 |
| 15 years | Meaningful, typically in the tens of thousands |
| 30+ years | Can reach six figures |
*Illustrative example only, based on a 1 percentage point fee difference and historical average return assumptions. Actual results depend on market performance, contribution levels, and the specific funds involved, and past performance does not guarantee future results.
How Much Does a 1% Fee Difference Really Add Up To?
A 1 percentage point fee gap sounds small until it is measured against decades of compounding. On the Department of Labor's own $25,000, 35-year example, that single percentage point is the entire difference between a $227,000 balance and a $163,000 balance. The fee itself does not change on its own; what changes is how long it is allowed to run before anyone checks it.
How Does the Roth Conversion Window Work for Maryland Retirees?
The Roth conversion window matters more for Maryland retirees than for residents of states with no income tax, and that difference is easy to miss if you are reading a generic national article. Maryland taxes traditional IRA and 401(k) withdrawals as ordinary income, but Roth distributions are not taxed by the state once they qualify. On top of that, Maryland's pension exclusion for residents 65 and older reaches $40,600 in 2026, and that exclusion phases down dollar-for-dollar against Social Security income already being received.
That interaction creates a narrow, genuinely valuable window. The gap years between retirement and the start of required minimum distributions, when taxable income is often at its lowest point for the decade, are frequently the strongest stretch to convert pre-tax money to Roth at a lower marginal rate than a Maryland retiree will likely face later. Miss the calendar year, and that year's low-bracket opportunity does not come back.
For business owners and pre-retirees around Forest Hill, Bel Air, and greater Harford County, this is not an abstract planning concept. It shows up directly in the numbers we run with local clients, because Maryland's tax treatment of retirement income is genuinely different from what a national article assumes. A Roth conversion strategy built for a no-income-tax state can leave real money on the table for a Maryland household.
For a full walkthrough of timing, tax brackets, and how the gap years work, see our complete guide to Roth conversions in the pre-RMD gap years, and for the mechanics of the pension exclusion itself, see how Maryland taxes retirement income.
What Does Money Avoidance Cost a Business Owner Specifically?
For a W-2 employee, an unreviewed 401(k) is often the whole problem. For a business owner, deferred decisions stack on top of each other, and each one compounds against its own clock, not a shared one.
Consider a composite scenario built from patterns we see repeatedly with Harford County business owners, not any single client. A 58-year-old owner of a local services company has an old 401(k) from a job held before starting the business, worth $60,000 and untouched for eleven years. He has also never had the business formally valued, has not funded the buy-sell agreement his attorney drafted six years ago, and has not updated his estate documents since his children were minors. Composite example for illustration only; individual outcomes vary based on plan fees, funds, timeline, and market performance.
None of these is a single bad decision. Each is simply a decision that never got made. Run the math on just the first item: at a 1 percentage point fee drag, the same math the Department of Labor uses on a $25,000 balance, a $60,000 balance held for another twelve years toward retirement loses tens of thousands of dollars in ending value against a low-cost alternative, with no active mistake required.
The other three items do not show up on any fee statement at all. An unvalued business leaves an owner with no defensible number if a partner buyout or an unsolicited offer arrives this year; our guide to what a professional business valuation costs walks through that specific gap. Unfunded buy-sell language means the valuation would not even matter, because the mechanism to act on it does not exist. And an estate plan drafted before Maryland's $5,000,000 estate tax exemption, fixed since 2019, or before the children grew up, needs the same kind of scheduled estate plan review that our complete guide to Maryland's estate and inheritance tax covers in full, not a mental note to get to it eventually.
This is precisely why a stacked backlog deserves a scheduled review rather than good intentions. Chesapeake's Fit Call exists to walk through exactly this kind of situation: the old rollover, the unconverted IRA, the valuation that was never ordered, and the estate documents that no longer reflect the family or the business as they exist today.
How Big Should Your Emergency Fund Actually Be?
Most people know the general rule and still have not sized their own number. Fidelity recommends building 3 to 6 months of essential expenses in an emergency fund, but the number that matters is the one calculated against your actual monthly spending, not a vague sense of "more would be nice."
The cost of skipping that calculation is not abstract. It shows up the day an actual emergency arrives and the cushion turns out to be thinner than assumed, forcing either a high-interest debt balance or a poorly timed sale of investments to cover the gap. Neither outcome is dramatic on its own. Both are avoidable with one evening's worth of arithmetic.
What's the Fastest Way to Break the Avoidance Loop?
The typical guidance for someone stuck avoiding a financial decision is more research, more education, a deeper dive into the options. That is usually the wrong prescription, because more research is often what created the loop in the first place. The fix is picking the smallest next action and doing it this week, not the comprehensive version.
At Chesapeake, we walk clients through a quick gut check we call the Three-Number Delay Audit: three specific numbers that turn a vague sense of "behind" into an actual dollar figure, in about twenty minutes total.
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- Log into the old 401(k) and check the expense ratio, running it through a free 401(k) fee calculator if the statement does not spell out the number plainly. That is the entire task, not a first step toward a bigger project.
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- Set a specific emergency fund number in dollars, based on your actual monthly expenses, and automate a transfer toward it, even a small one.
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- Put one specific week on the calendar every year to check whether a Roth conversion makes sense given that year's income, so the window does not close silently again.
Does Fixing This Require a Full Weekend of Research?
No, it does not, and treating it that way is usually what keeps the loop going. Checking a 401(k)'s expense ratio takes about twenty minutes. Sizing an emergency fund against real monthly expenses takes one evening, not a weekend. The comprehensive version people keep waiting to have time for is rarely the version that actually moves the number.
Money avoidance is a well-documented pattern in behavioral finance, and it responds to structure better than it responds to willpower. Chesapeake Financial Planners works through exactly this kind of stuck decision-making with clients using the R.U.D.D.E.R. Method™, our six-step planning process: Review and Recognize, Uncover and Understand, Design and Develop, Discuss and Decide, Execute and Empower, and Reassess and Refine. The structure exists precisely because "I'll figure it out when I have more time" is rarely how anyone actually gets unstuck.
For more on how psychology shapes financial decisions beyond delay specifically, see our guide to behavioral finance, and if fee drag on an existing account is the piece you have been putting off, our breakdown of what a 1% advisory fee actually costs over 25 years walks through the full math.
Frequently Asked Questions
What is money avoidance in financial planning?
Money avoidance is the pattern of postponing financial decisions, such as reviewing an old 401(k), sizing an emergency fund, or acting on a Roth conversion window, not because of a bad decision but because taking no action does not feel like a choice. It differs from a single financial mistake because it compounds silently over months or years, and the person avoiding it is often financially literate enough to know they should be doing more, which is part of what keeps the pattern in place.
How do I calculate what financial procrastination has actually cost me?
Pick the single item you have been putting off longest, such as an old 401(k) or an unreviewed insurance policy, and identify what is known about it: the fee being charged, the tax-advantaged window that has closed, or the coverage gap that has existed. Multiply that known cost by the number of months or years it has been running. The Department of Labor's example shows a 1 percentage point fee difference on a $25,000 balance can reduce the ending value by 28% over 35 years, which illustrates how quickly an unreviewed cost compounds.
Why do smart, high-earning people avoid financial decisions the most?
Smart, high-earning people often get stuck because they understand a decision has real complexity, so the responsible-feeling move is to research it properly, which requires a block of uninterrupted time that rarely arrives. Meanwhile the small, low-stakes actions, like checking a fee or sizing a cash cushion, get stuck waiting behind the complex ones, even though they do not require the same depth of research.
Does an old 401(k) really need to be reviewed even if nothing is wrong with it?
Yes, because an old plan can continue charging a higher expense ratio or sit in an allocation that no longer matches your timeline even when nothing has technically gone wrong. Checking the expense ratio and fund lineup against your current goals typically takes about twenty minutes, and it is the single highest-leverage first step for anyone who has been avoiding a full account review.
What should I do first if I have been avoiding my finances for years?
Pick the one item you have been avoiding longest, identify the smallest possible first step, such as logging in to check a number or emailing a former employer's HR department for a rollover form, and do that one step this week. The goal is not resolving the whole situation at once; it is moving the specific item from zero to one, which is usually enough to break the pattern that has kept it stuck.
If money avoidance has been quietly running in the background of your own finances, the Three-Number Delay Audit above is a reasonable first move to try on your own. But if you already know you are carrying an old 401(k) from a job change, sitting on a Roth conversion window that closes at year end, or getting close to the age where Maryland's pension exclusion starts to matter, that is exactly the situation Chesapeake Financial Planners was built to walk through with Harford County, Bel Air, and Baltimore-metro families and business owners. Schedule a call and we will run the actual numbers on what the delay has cost so far and what the smallest next step looks like for your specific accounts.
A version of this article was originally published on Jeff Judge's LinkedIn.
Disclosures
The information provided is for educational purposes only and should not be construed as investment advice. Investment strategies should be tailored to individual circumstances, risk tolerance, and goals. Past performance doesn't guarantee future results. Consult with qualified financial professionals regarding your specific situation.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
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