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Book:  Retired Inspired

Author:  Chris Hogan

Purchase:  PrinteBook | Audiobook

Citation:  Hogan, C. & Ramsey, D. (2016). Retire inspired : it's not an age, it's a financial number. Brentwood, Tennessee: Ramsey Press.

Three Big Takeaways:
  1. Retirement is not an old person thing; it's a smart person thing. I need you to let go of the myth that retirement is just for old people. Retirement is your chance to plug in and do the things you have always wanted to do. And talking about isn't just for seniors either. The earlier you talk about retirement and start working a plan for retirement, the most choices and opportunities you have to retire when, where, and how you want. (pg. 29)

  2. The average care payment in America is right around $492 a month. If you decided to avoid car payments and invest that $492 a month into your retirement instead, you would have almost $2.9 million to fund your dream after thirty years of saving at a 10 percent rate of return. That's almost $3 million - just because you decided to skip car payments. If you had chosen the car instead, you wouldn't have $3 million in your retirement account. Instead, you would have spent $236,160 in car payments over the course of thirty years, and you wouldn't have a thing to show for it. (pg. 82)

  3. The most common pitfall that leads us into debt is "keeping up with the Joneses." I'll tell you what I call it: fake rich. It really is all about trying to finance an image. Living a lifestyle beyond your means so that you can keep up appearances and fit in with the neighbors is a sure way to wreak financial havoc on your life. (pg. 85)


Other Key Ideas

Retirement is not an end; it's a beginning! Retirement is not just the rest of your story; it can be the best of your story. It should be a time when you stop worrying about the have-tos and start waking up every day focusing on the want-tos. (pg. 7)

Ten thousand people are hitting retirement every day, and most of them will be drawing from Social Security. I'm not saying Social Security isn't going to be there; I'm saying that ten thousand straws a day are being added to the list. It's a good enough reason not to completely count on Social Security to be there for the same way that it may have been for your parents. Social Security is really only meant to replace 40 percent of your paycheck. However, some believe that by the year 2030, Social Security will only be able to cover 30 percent of your working salary. Here's my advice when it comes to Social Security: If it's still around when you retire, then be thankful and definitely take advantage of it. But don't make that your only plan. (pg. 31)

Statistically, the average retiree spends about $5,000 per year out of pocket for health care. But experts actually suggest playing it safe by budgeting $11,000 per year for health care costs in retirement. That's more than $900 a month that needs to be accounted for somewhere in your budget. (pg. 68)

People will work so hard to put themselves in a fantastic financial position. They will do whatever it takes to get ahead of the game. But, just when it looks like they're winning, their impulses take over. That's when people finance a boat, or an unreasonable new home, or a convertible, or some fancy jewelry, or even a vacation around the world. You are just one bad decision from derailing your retirement dream. (pg. 75)

When did it become ok to buy such expensive cars? According to many people, they are hard words and they deserve a nice car. The word deserve puts you on the fast track to stupid. It is so dangerous. You can justify anything in your mind when you start to use that word. "I work hard, so I deserve..." or "I've paid some stuff off, so I deserve..." or "The neighbors are driving a new car, and I deserve..." The really dangerous part is that "I deserve" can quickly become a mindset. (pg. 77)

Keep in mind there is more to debt than basic math. The really terrifying downside to debt is risk. In addition to borrowing from your dreams, debt places you at risk. No matter what is happening in your life, no matter what life deals you, that debt will always demand a payment each month. (pg. 83)

When you retire, you want to owe nothing to anyone. you do not want to have any debt - including a mortgage. Every dollar of your retirement income should go toward funding your dream, not paying off debts. (pg. 89)

The most important thing I can tell you about interest is this: Interest that you pay is a penalty; interest that you earn is a reward. When you save money to build wealth, you need to take advantage of the power of compound interest. Albert Einstein called compound interest the eighth wonder of the world. It's like a mathematical explosion. You put in a little money, and that money makes money, then that money makes more money. It just keeps going, and all it costs you is a little wisdom and a lot of patience. (pg. 103)

People who are scared of investing may just stick with saving cash throughout their life. But you mustn't forget about inflation. Inflation averages about three percent a year. So, if you put $100 in a cookie jar today, you might only be able to buy $97 worth of stuff next year, and then maybe $94 next year, and only about $40 worth of stuff in twenty years. You are essentially guaranteeing that you'll lose money over the long haul if you stick with simply holding on to cash. (pg. 108)

Real estate investments are probably the most hands-on, time consuming investments you could make. I tell people as a general rule to avoid real estate unless they have a real passion for it. Real estate is a huge responsibility - one that many investors simply aren't ready for. You should only consider real estate once you have the cash on hand to buy the properties. That's right: cash. You should never take out loans for a real estate investment. Real estate often becomes more of an expense than an investment to buyers who don't know what they're doing. (pg. 124)

401(k) and 403(b) plans are tax-deferred plans, meaning contributions come out of your paycheck before you pay income tax on that money. Since your contributions to these plans are pre-tax - meaning the money is invested before you pay income tax - this kind of investing lowers your current taxable income and gives you the chance to invest more money now (by avoiding those taxes), which in theory should allow you to enjoy even more growth on your investments. However, you will pay income tax on your withdrawals at retirement. That's where the tax-deferred part comes in. It just means you're deferring - or putting off - paying those taxes until you take the money out at retirement. Then there are tax-free plans like the Roth IRA and Roth 401(k), which literally grow tax free. You fund these plans with after-tax dollars - meaning you pay income tax on the money before you contribute to the investment. The upside is you pay zero taxes on your withdrawals at retirement. (pg. 128)

There are two types of Employer-Sponsored Qualified Investment Plans. The first is the defined benefit, which is essentially a pension plan with a guaranteed payout. The risk in this type of plan is on the employer to save and invest the contributions. The second type of qualified plan is called a defined contribution. This would simply be something like a 401(k). In this type of plan, the risk is on the employee to save and invest in the plan. (pg. 129)

The US Department of Labor reports that there are over 500,000 companies in the United States that offer 401(k) plans. About 50% of those companies also offer a Roth 401(k) option for retirement. There are reportedly over 80 million participants nationwide. 46% of company plans have an auto-enrollment feature with a default 3 percent contribution rate. Of employees who participate in a 401(k) plan, their contribution rates average between 5 and 7 percent. If your company offers the Roth 401(k) option, take it! You get the benefit of tax-free growth on your contributions, which could literally save you hundreds of thousands of dollars at retirement. With the Roth option your contributions are made with after-tax dollars, meaning you'll pay income taxes on that money before it makes its way into your account. So it's a little more expensive on the front end, but the payoff in retirement is off the charts! (pg. 130)

If you don't have access to a 401(k) or 403(b) at work, or if you want to do investing beyond the 401(k), you need to look at the IRA. An IRA is a tax-deferred treatment on different kinds of investments. Since it is tax-deferred, you will pay tax on the distributions you take at retirement. On the other hand, the ROTH IRA allows you to contribute after-tax dollars to get completely tax free growth on your investment. If you've left a job where you had a 401(k), I always recommend doing what's called a rollover into a new IRA. A rollover just means that you move your entire 401(k) account into a new IRA. When you do that, you get a lot more flexibility and have access to more funds to tailor your account to fit your needs. (pg. 133)

For Social Security, full retirement age is currently considered 67 years old. This refers to the age when you will receive 100 percent of your full, calculated benefit. That's why I always encourage people to hold off on social security until at least 67. You can start receiving benefits at the age of 62, but the earlier you start, the less money you bring home. If you start receiving benefits at 62, you would only receive 70 percent of your full, calculated benefits. That means you'd be intentionally giving up 30 percent of your Social Security income for the rest of your life! On the other hand, if you wait until age 70 to being taking those benefits, it would increase your payout to a maximum of 124 percent! There is no reason to wait any longer than the age of 70 - you don't increase your payment any further. Keep in mind that the application age for Medicare is 65. If you don't plan to take Social Security benefits that early, make sure that you sign up for Medicare alone at age 65. (pg. 136)

Under no circumstances should you waste your time with these types of insurance policies: Credit Life or Credit Disability, Cancer or Hospital Indemnity, Accidental Death, Prepaid Burial, Mortgage Life Insurance. On the other hand, here are the seven types of coverage I recommend everyone have: Homeowners/Renters, Automobile, Health, Term Life, Disability, Long-Term Care, Identity Theft Protection. (pg. 198)

Medicare is a government program for seniors that provides some insurance to help cover medical and health-related services. Medicare is basically a form of social welfare. Most people will sign up for Medicare at age 65. I you are still working after the age of 65 and haven't signed up, you need to make sure that you sign up within eight months of when you stop working. Remember though, Medicare is not the same as Social Security, and it is not free. In fact, it still involves premiums for coverage and requires co-pays for most of its services. You should also remember that Medicare does not provide any type of coverage for your dependants. (pg. 201)

Life insurance has one and only one job: to replace your income after your death. If you have people who are dependant on your income, then life insurance shouldn't even be a question. Get it. I would recommend getting twelve times your annual income in coverage. So, if you earn $50,000 a year, you'd get $600,000 in term life coverage. Remember, life insurance is for your family and for your dependants, if you are young and single you most likely do not need life insurance. (pg. 203)

Statistics are clear that you actually have a greater chance of being disabled than of dying during your working lifetime. A disability will result in a loss of income. So you want to protect yourself and provide for your family by having disability insurance. If your company offers disability as part of their group plan, buy it. You won't find any cheaper on the open market. (pg. 204)

No matter what, I want you to make sure that you take on a monthly mortgage payment that is no more than 25 percent of your take-home pay on a fifteen year fixed rate loan with at least 10 percent down. Seriously, none of this 30 year mortgage nonsense. That a waste of tens of thousands of dollars in interest over the life of the loan. The second ground rule when it comes to mortgages is to make sure it's paid off before you retire. A paid-for house when you retire is a total game changer. You have basically freed up more money for investing when you have a paid-off mortgage. (pg. 214)

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