Tamara Wilhite is a technical writer, industrial engineer, mother of two, and published sci-fi and horror author.
The book Retire Inspired builds on Dave Ramsey’s 7 Baby Steps. Dave Ramsey’s advice is to pay off debt except for the house and start saving 15% of your income until retirement. But how much do you need to retire? How much do you need to retire with the lifestyle you want, which may require more based on desires or catch-up savings? Retire Inspired answers those questions.
The author’s tagline is “it’s not an age, it’s a financial number.” The financial number you need to retire inspired, the amount of money you need in your retirement nest egg to retire with the standard of living you want, is called the RIQ by Chris Hogan.
Pros of “Retire Inspired”
The author’s advice of “don’t rely on pensions” is poignant given how many retirement plans and municipalities are having to cut pensions to stay solvent or cut them as part of bankruptcy proceedings—and how many more will have to do so because government and union officials promised more than the taxpayers and customer base could afford.
The author discusses why you shouldn’t rely on Social Security, whether it is cut in the future in order to stay solvent, the retirement age is raised, means testing is instituted, or any other reason why you can’t count on a check from the state for any meaningful amount. And best of all, these issues are covered in a politically neutral but realistic manner without cutting into the meat of the book—how to save for your own retirement.
Chris Hogan addresses the emotions that make dealing with money hard, such as getting caught up in regret for what we wasted money on or guilt that keeps us giving money we need to save. He doesn’t spend as much time addressing this as Suze Orman, but his book isn’t intended to deal with the emotional relationship with money, just address the common issues before moving on to the mechanics. He sees having the dream of where you want to go as what lets you release the emotional weight of mistakes made and worries of the future.
His book spends some time on the categories of retirement you could have, from “nothing but Social Security poverty” to the dream retirement his RIQ book is intended to help you achieve. His book is one of the few that explains why you really don’t want to rely on children or other relatives for support during retirement.
Chris Hogan talks about the “hour of stupid,” the literally costly impulse buys that can kill your retirement plan. Spending $50,000 taking all the family on vacation—10% of your retirement lump sum—is one. Getting house fever and buying a more expensive home when you need to cut expenses, wasting cash on a fancy car, and others are detailed in the book. The vision of retirement, like the dream of a healthy body weight or being debt free, if powerful enough, can keep you from signing on the dotted line for these big purchases that cost you your retirement dream. "Latte factors" matter, but they pale compared to the big splurges – and few books admit this happens to retirees instead of the young, dumb and stupid.
Mr. Hogan’s Retire Inspired book at several points discusses why you shouldn’t “invest” in your children by paying for private K–12 school or their college when you aren’t able to save for retirement, and he addresses early on how expecting to rely on your children for retirement based on these “investments” can backfire. Few financial books do this. The saying “your children can borrow for college, but you can’t borrow for retirement” comes to mind, though being a Dave Ramsey personality precludes him from saying that.
Cons of Chris Hogan’s Book
The budgeting chapter is light, though it would be redundant to those who’ve read Dave Ramsey’s other books. Dave Ramsey’s financial books like More Than Enough are a better choice if you are new to budgeting.
Chris Hogan mentions several stories of adult children are sponging off their parents, draining them financially as they try to save for retirement and are challenged to do so as a result. The book The Millionaire Next Door calls this “Economic Outpatient Care” and gives an in-depth chapter on this subject and why it is so bad for both the giver and the recipient.
Chris Hogan’s book doesn’t go very deep into the math of saving X per month versus Y per month at every life stage. He recommends the RIQ tool instead of running the numbers for your own retirement plan.
A Tour of the RIQ Tool
The RIQ tool is the “retirement IQ” tool offered online by Chris Hogan. You sign up with your email address.
Next, you pick your retirement dream. This visualization step is based on the psychology that if you can see it, you can achieve it, that you have to have a big “why” before you’re willing to work or sacrifice.
You enter your annual income. It then asks how much you need to fund your dream, which is roughly your after-tax income on a monthly basis. It lets you adjust the monthly number.
You enter the number of years until you want to retire, instead of the common “what’s 65 minus your age”. The calculations are personalized so that whether you want to retire at 75 or 55, it will do the math for you. It also takes care of the inflation calculations for you.
You enter how much you already have saved for retirement.
After entering this, you are given your “R:IQ”. This is the lump sum you’ll need when you retire at the stated age to fund your goal. If you have enough already saved now plus growth over time to equal that minimum nest egg size, it says you’re on track to reach that goal.
It then takes you step by step through “your plan.” It asks about your will. It asks about term life insurance, though those approaching retirement age probably don’t need this unless it will pay off the house, fund the surviving partner’s savings nest egg or pay inheritance taxes on a family farm or business. It wants you to say if you have an emergency fund per Dave Ramsey’s advice, if you don’t, you’ll receive information on Dave Ramsey’s program. It will ask if you have a budget. It asks about your current debt level, excluding the mortgage. If there is any, you will get information on Dave Ramsey’s Financial Peace University (get out of debt) program. At the end, it gives advice on any Dave Ramsey-approved resources such as investing help or legal advice.
© 2016 Tamara Wilhite