Book Review: Retired Inspired It's Not an Age It's a Financial Number by Chris Hogan

This month's book review is Retired Inspired; It's Not an Age, It's a Financial Number, by Chris Hogan. I love the name of the title, Retire Inspired.  To me, the title makes thinking about retirement planning as something fun and invigorating. Perhaps it is quite the opposite feeling it evokes in people: dread, confusion, or no thought at all. However, retirement planning is a lesson we all need, for as long as one is alive, that day will come when you can no longer or do not want to continue working.  You want to be the one to decide when your working days are done.  By learning and practicing Chris's book's principles, you will be well on your way to Retire Inspired. 

Preparing for retirement years was something other than what I was taught in high school.  Money management was not part of the curriculum in those days.  The few lessons I learned came at an early age when my father gave me a credit card and told me I needed to start establishing credit.  Credit to me was like free money.  You could get whatever you wanted, and it was free.  I thought this way because one friend could shop and charge to her father's account whenever we were at the mall.  I remember going to the nicest dress shop, where she would "buy" the prettiest clothes.  The clothes would be placed on the counter for the clerk to ring up, and all my friend had to say was, "Put it on my daddy's account."  Wow!  I will admit I was a bit jealous of her shopping sprees.  I wished I could say, "Put it on my dad's account."

When my father gave me a credit card, my wish came true.  He stated since I would be leaving home soon, I needed to establish my credit.  I immediately went to task on this assignment.  I called my friend up and said let's go to the mall.  I shopped and handed the clerk my card with the biggest smile ever.  I could not wait to get home and show my parents what I got and how I was establishing my credit.  When my dad got home from work, I laid out my purchases to show him, and all he said was, "How are you going to pay for that?"  I looked at him quite perplexed and said, "Well, you are Dad.  You gave me the credit card and told me to establish credit, right?" After that statement, he sat me down, and we talked about credit and how it works.  Simply, you do not spend what you do not have.  In retrospect, we should have had this conversation when he first gave me the card, but I think he gave me more credit (haha) than what I was due.  I learned I would have to pay off the credit card bill, not my parents. I didn't have a full-time job except for seasonal work and babysitting.  So, here I was, back at the mall, returning the purchases because I did not have the money to pay the debt. 

One of the first critical takeaways from Retired Inspired is to live debt-free.  The term Chris uses that I love is "become allergic to debt" (Hogan, 2016).  I do not think Chris would agree with my father's financial lesson in giving me a credit card.  Though learning not to spend what you do not have has stuck with my entire life, Chris advises against credit cards and recommends only using a debit card tied to your checking account.  That way, you are not tempted to buy now and pay later.   

Visualize Your Dream Retirement 

Before getting too far into the book, he asks the reader to begin visualizing your life when

they retire.  Chris wants you to clearly understand how and where you want to live.  Take the time and write down your dreams and plans. Do you see yourself traveling across the country in an RV?  Do you see yourself lying on the beach with a drink in one hand and a book in the other?  Or do you see yourself volunteering with your favorite charity and helping others in your community?  (This exercise coincides with some of the principles discussed in the Alone Advantage, September's Book of the Month.  So, after reading this post, be sure to go back and read about the Alone Advantage.)  After you have written your dreams, now is the time to make the financial action plan.  The action plan will be a long-term commitment over several years, even decades. Seek the help of a financial advisor and other dream retirement team members, such as an independent insurance agent, an estate planning lawyer, and an accountant, to name a few (Hogan, 2016).  You must be patient, focused, and disciplined in your financial habits to achieve your dream retirement.  Remember, there will be economic ups and downs, but having a well-written plan will help navigate some of life's curveballs.

Create a Budget 

Another recommendation is preparing and sticking to a budget.  Whether you are single or have a family, you must make a monthly budget.  Hogan (2016) states, "Budgeting is and always will be your road map to financial success, no matter how much or how little money you have" (pg. 51).  To start the process, you begin with your current income, then determine what is a need and what is a want, and third, devise the monthly plan for your money (Hogan, 2016).  Determine where every dollar is going and name it.  Once the budget is set, stick to it.  Be wary of getting caught up in keeping up with the Jones or being fake rich (Hogan, 2016).  Chris equates fake rich as projecting a lifestyle you cannot afford that is based on using credit that equates to debt.  When purchases that are not needed start tempting you because you think you deserve that new car or boat, stand firm and do not give in to temptation.  Review your financial plan to keep you focused on the end goal, retiring on your terms.

The Power of Compounded Interest

Throughout the book, many examples show the power of compounded interest.

Compounded interest is earning money on the principal or initial amount deposited plus the interest that builds over time.  Compounded interest can work for you or against you, whether it is money you are investing or money you are paying out to cover debt such as a new car loan.  You want the compounded interest that is working for you!  Though the desire to drive that new, flash sports car is screaming your name, Chris does some math for you that may have you rethinking what you drive.  When Chris wrote the book, the average car payment was $492 per month (Hogan, 2016).  If you invested that amount rather than putting it into something that depreciates as soon as it is driven off the car lot over thirty years at a 10% rate of return, you would have nearly 2.9 million dollars to fund your retirement (Hogan, 2016, p. 82).  If you choose car payments over 30 years, you spend 236,160 dollars in car payments with nothing to show for it at the end of that period (Hogan, 2016).  When seeing those numbers, the choice of where the money should go seems very clear.

When Do I Start Retirement Investing

People may ask, "When should I start saving or investing in my retirement?"  The answer Chris gives is "Now".  He offers advice on steps to take to get ready to start investing in your retirement, but once those are checked off, such as paying off all credit cards and establishing an emergency fund, you start investing (Hogan, 2016).  However, you need to read the book to get all the steps! Hogan again outlines the miracle of compounding interest and how it behooves the individual to begin as soon as possible; your 20s is the best.  He equates the decades of life to those of the innings in baseball.  In your 20s, you are in the 1st and 2nd inning of the retirement ballgame.  By the time you hit your 60's, you are in the ninth inning, and your retirement game will require much work, both physically working and managing the retirement plan landscape.  However, Chris offers hope for those who start later in life and provides strategies to help compensate for the lost years. 

Retirement: It's Up to You

I appreciate how Chris states that your retirement plan is 100% up to you and your

responsibility.  Do not count on inheritances or develop a mindset that your children will take of you, or rely totally on social security as your only means of retirement income.  If you do rely on social security alone, you will be living a life most likely below the poverty line (Hogan, 2016).  You will burden your children, and do not think otherwise.  Your children will most likely have a family of their own, and adding one or two parents to the mix will be budget-busting for them. If blessed with an inheritance, respect what has been gifted to you (Hogan, 2016).  Do not squander it; work with a financial planner to use the funds appropriately (Hogan, 2016).   

If you stay strong and follow your plan, you can Retire Inspired. 

Reference:

Hogan, C. (2016). Retire Inspired It’s Not an Age It’s a Financial Number. Ramsey Press, The Lampo Group, Inc.