This One Thing Could Change Your Retirement Future

This One Thing Could Change Your Retirement Future

By Chris Hogan When it comes to saving for retirement, I’ve heard countless people tell me why they’re not taking action. “I want to play now and save later.” “I don’t have time to think about it at this stage in my life.” “I’m looking at a pile of debt.” I’ve heard every excuse in the book! There’s another reason some people aren’t saving for retirement—and it might surprise you. The Facts Don’t Lie Recently, my team used a third-party research panel to survey adults about retirement. We wanted to know how much people are saving, how they feel about retirement, which age group is most prepared, and much more. And we’re learning a lot about the state of retirement in the U.S., including who seeks out information on retirement education. Here’s what the study found: Nearly 40% of upper-income workers (those who make $75,000 or more) have consulted a financial advisor, compared to 10% of lower-income employees (those who make less than $25,000). Thirty-six percent (36%) of upper-income employees have read books on retirement, compared to 11% of lower-income workers. Thirty-six percent (36%) of upper-income employees look online to find more information about retirement. On the flip side, just 22% of lower-income workers do the same. Do you see a pattern? I do! Upper-income workers spend a lot more time learning about retirement than people who make less money. That’s a problem. People with lower incomes face enough challenges in saving for retirement without adding a lack of knowledge to the mix! The Source of the Problem? Why don’t lower-income employees spend more time learning about retirement? Part...
5 Debt-Free Ways to Pay for College (and Still Save for Retirement)

5 Debt-Free Ways to Pay for College (and Still Save for Retirement)

If you have kids who will start college soon, it’s no surprise to you that three out of four parents in your shoes say they are concerned about having enough money to help their kids pay for school. Many want to help, but they have their own financial challenges to overcome. How can they get their kids through school and still pay off debt or save for retirement? Four years ago, Ron and Paula R. from Eagle, ID, found themselves facing that situation. Their son, David, was headed to college and their daughter, Debbie, was set to start the next year—but they had zero college savings. They tried to solve the problem like millions of parents do every year. They signed up for thousands of dollars in student loans for David’s first year of college. And not just any college—an expensive, out-of-state, private college. That loan brought their total debt up to around $80,000, and they still owed on their home. It seemed their only option was to put their own financial future at stake and fund David and Debbie’s college education solely with student loans. In Search of a Better Way A few months after David started college, Ron, Paula and Debbie attended Financial Peace University together. There they learned about the mistakes they’d made, but, even better, they discovered that they did have options—debt-free options—that would allow them to get their kids through college without sacrificing their own financial future. They immediately decided to cash-flow David’s tuition, and he picked up a part-time job to help with the costs. And what about that expensive private school? “It was gone as soon...
How to Save 15% for Retirement Without Cramping Your Style

How to Save 15% for Retirement Without Cramping Your Style

A recent report shows yet again how unprepared Americans are for retirement. According to the study by the National Institute on Retirement Security, the average working household has no nest egg at all. Even more alarming is the fact that the median amount saved by near-retirement families is a mere $14,500. That sounds pretty hopeless, but it could be easier than you think to turn that trend on its ear. By investing $300 a month—about 7% of the average income—and keeping it up for just five years, you could retire with $260,000–435,000 in your nest egg in 30 years. That may not provide a four-star retirement, but at least it’s a start! That means with a little planning and a more-than-average dose of motivation, nearly everyone can retire with at least enough money to cover their bills. Save Without the Sacrifice Don’t get confused. We’re not saying you should invest $300 a month for the next five years and call it a day. To get the kind of retirement we all dream of, you need to consistently put away 15% of your income. But for right now, let’s just focus on that first $300. Where can you find $300 a month in your budget to get started on your nest egg? Your first thought might be to slash your restaurant or entertainment budget or to get a second job. Obviously, if you’re overspending in those categories, cutting back is a wise choice. And extra income from a side job makes reaching any financial goal much easier. But you may not have to completely sacrifice your time and your small luxuries. Here...
Answers to 3 Common Retirement Questions

Answers to 3 Common Retirement Questions

By Chris Hogan People ask me retirement questions all the time. They catch me at events, comment on my social media feeds, and stop me in the hallways. You might have questions, too. Here are a few I hear often: Why should I pay an advisor a commission when I can invest in the same things on my own for free? That’s a great question! If you chose the same investments as an advisor, and if you kept the investments for the same length of time an advisor would, you could match the advisor’s returns and save on the commission. But those are two big assumptions! What are the chances you’d pick the exact same investments? And when you go it alone, you’re more likely to make decisions based on emotion—like bailing out when the market dips. Those two assumptions could cost you a lot of money. DALBAR, an investor behavior research group, found that solo investors earn 4.6% less in the long term than stocks in the S&P 500. That doesn’t sound like a big deal, but over 30 years, that 4.6% means the difference between $1.1 million at retirement and $525,000 at retirement (hello, compound interest). If I were you, I’d pay the commission up front and earn myself an extra $500,000! What if I’m behind where I need to be for my age group? Should I take even more risk? Should I give up hope and plan on working for the rest of my life? Don’t give up! Don’t ever, ever, ever give up! It’s never too late to buckle down and get serious about retirement....
Nothing Will Prepare You for Retirement Like This Heart-Breaking Story

Nothing Will Prepare You for Retirement Like This Heart-Breaking Story

Chris Hogan is America’s voice on retirement. He helps spread Dave Ramsey’s message of financial hope to audiences everywhere. An engaging and humorous speaker, Chris is an expert on subjects like mortgages, health care and investing. He knows how money works, and he has a passion for helping families prepare for retirement. Chris has become a sought-after speaker who loves to challenge, empower and inspire audiences. His new book, Retire Inspired: It’s Not an Age; It’s a Financial Number hits shelves in January. Here is an excerpt from Chapter 1 of his upcoming book. His name was Michael. He was one of my clients, and he told me a story I will never forget. Michael received a phone call from his favorite aunt who needed him to cut her grass. He was more than willing to help; this was the aunt who had always been special to him. She was one of those people who dedicated her life to helping others. He got up early on Saturday and loaded up his mower into his truck. His aunt was going to attend a function at church, and after they chatted for a while, her ride came and she was on her way. Michael went to work on the yard. A couple of hours into the job, Michael decided to stop for lunch. However, he had been in a rush that morning, and he had forgotten to pack his lunch. So, sweaty and hungry, he thought he’d just go find something to eat in his aunt’s kitchen. No big deal, right? Michael opened the fridge, but all he saw was some...
40-Something? How to Make the Most of Your Retirement Savings

40-Something? How to Make the Most of Your Retirement Savings

Stroll down the birthday card aisle, and you’d think life ends at 40. But the truth is, you’re on the verge of a major upswing. According to the Census Bureau, household income peaks between the ages of 45 and 54. So does that mean you can finally buy that boat you’ve always wanted? Well, that’s one way to look at it. But we have a better idea: Why not use it to build a bigger future? The Retirement Income Gap Many Americans head into their high-earning years with a ho-hum approach to retirement saving. A recent Vanguard report shows that voluntary 401(k) participants between 35 and 44 years of age only invest 6.3% of their income on average. The average deferral rate grows to just 8.7% in the 55–64 age range. That’s far below the 15% that Dave Ramsey recommends you invest for retirement—and it’s having a real effect on household income. Census data shows that household income loses half its heft by the time most Americans retire at 65. That kind of pay cut makes it hard to afford the same lifestyle you enjoy today—much less live out your retirement dreams. But that’s not all. Social Security makes up more than half of household income for the 65 and older crowd, according to the Government Accountability Office (GAO). That’s a scary thought considering the questionable future of Social Security. It’s time to change that equation. Your income is your most powerful wealth-building tool. You have the chance to move your future in a whole new direction. Don’t let your most profitable years pass by without taking full advantage of the opportunity to build...