Chris Hogan is America’s voice on retirement. He helps spread Dave’s message of financial hope to audiences everywhere. An engaging and humorous speaker, Chris is an expert on subjects like mortgages, healthcare 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. Here's an excerpt from his book, Retire Inspired: It’s Not an Age; It’s a Financial Number available now in the online store
If you want to win at the retirement game, you’ve got to take control of the behaviors that might keep you from investing. With that in mind, let’s take a look at three reasons why people hit retirement with no money.
Reason 1: They Don’t Invest
Once you get past all the excuses people make, the number-one reason people have no money when they arrive at retirement is because they refuse to invest. Sometimes they have a low-risk tolerance and are just scared. Sometimes they’re confused and don’t know what to do. Sometimes they spend too much time watching cable news and get freaked out about interest rates and the ups and downs of the market.
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The finance nerds of the world like to argue about the rate of return on money, and they are completely correct: higher interest rates yield higher returns. No kidding! But here is the bottom line that you need to hear: 8 percent, 10 percent, 12 percent, and 15 percent of zero money invested is still zero! Market returns mean absolutely nothing to you if you’re not investing.
You have to take an active approach to your own financial future. It is your retirement, no one else’s.
Reason 2: They Jump Off
In 2008, when we had the big market dive, many people went back to the mentality of "See, there it goes again. The market is just not something we can trust." They went through that first drop and panicked. The stats show that the stock market actually recovered from this big dip, but the people who pulled out their investments missed out on those rebounding returns. They lost money in the process.
When you ride that investment roller coaster long term, you have to go in eyes wide open and aware there will be ups and downs. The key is to keep your seat belt on, keep your bottom in the seat, and hang on for the long haul. Even when the market goes down and everyone else is freaking out, I don’t want you to be stressed. Why? Because you’re plugged into a plan that works in the long run. If you don’t consistently invest over a long period of time, or if you jump in and out all the time, you probably won’t make it to your high-definition retirement dream.
Reason 3: They Make Stupid Decisions
I was newly married, and my wife and I were both working. We were making good money, and I decided that I was going to dabble in some stocks. So, we put about $2,500 into some AOL shares. The next thing you know, we looked up and it had more than doubled. We were obviously excited about this, so we added some money to it because I thought we were riding a wave that just wasn’t going to run out. Before we knew it, we had $10,000 tied up in stock with that one company.
The next thing we knew, our $10,000 grew to $15,000, and then to $20,000, and all the way up to $25,000. Instead of getting wisdom and guidance from an investment professional, I just stayed the course and kept the money in one stock. I firmly believed it would continue on to $50,000, $75,000, or even $100,000 over time! What could go wrong?
Before long, there was a "little bit" of a correction in the market, and the stock got a little shaky. You’d think that would have been my cue to get out. Wrong! Instead of getting out, I decided to double down. You know what that ended up doing? It doubled my losses!
My stock quickly went from $25,000 to $1,500 before I finally woke up and made some adjustments. This was the penalty I paid for not getting the proper guidance and not being aware of my risks. I’ve done my time with stupid, so I’ve earned the right to warn you away from the danger.
You and I are always one stupid decision away from wrecking a retirement dream. One bad risk on a single stock, one afternoon of day trading, one impulsive hour in the showroom of a luxury car dealership—all it takes is one moment of letting your guard down to undo years of hard work. Always measure the long-term impact of these kinds of decisions, and keep your guard up against stupid!