One of Erin’s team members sent me this book yesterday, so I read it. I was a bit skeptical, but Erin’s real-world experience going from a comfortable life to the poor house in one day comes home. How many times have you heard people say about their retirement, “I don’t even open my statements anymore because I’m afraid to look at them.” This book addresses that fear and more.

Why is this important to me?

I don’t want to waste your time. If you are spending your time reviewing this summary, then it must be worth it. According to Dr. Maslow, people have a hierarchy of needs. The most basic need is security. Money may not buy happiness, but it does buy options, and with options comes freedom. If you were scheduled to retire in 2008, then you saw that your 401K portfolio lost its value or more. Think about that impact for a moment. You spend 40 years working and saving your money and it takes three weeks to lose half of those savings.

Quality of life should be part of any financial plan. Today, there are several people in their 50s to 60s who wanted to retire to a vacation home or travel and now have to work until death. Fortune 500 executives now salute Wal-Mart because a handful of people leveraged our financial system to the brim to get commission.

The Big Retirement Risk is packed with great information. For the sake of time, I will describe three main points.

1. Four Wall Street Myths – 1.) In the long run, the market always goes up. The biggest trick the devil has done is to convince the world that it doesn’t exist. This is the same as the market always goes up. There are 20 to 30 year trends from 1900-2011 where the market was flat. So if that was your investment time, you lose. 2.) Diversification and asset allocation are critical to retirement success; Warren Buffet calls it Deperasification. Being invested in the stock market in different sectors is not diversification. 3) Leading Financial Services Firms Give You Options – The reverse is true because the level of expertise required for true custom retirement plans doesn’t scale well. The risk is too great. 4.) Net Worth Determines Your Lifestyle During Retirement – This is not true. The only thing that matters is the positive net cash flow. You may have a million dollar car and not have enough monthly cash to pay for gas. Assets must be derived from monthly cash flow to be effective.

2. Investing in lifestyle: Erin has an excellent method of investing in needs, wants, likes and desires. The concept is so simple that it is brilliant. You secure all your needs with a guaranteed return on investment and then finance the other stages with different types of investments. The only investments you are guaranteed are US government issues and insurance products.

Retirement promises from large financial services firms and 401K plans are broken. “It is estimated that 47% of Americans born between 1948 and 1954 may not be able to pay basic expenses and uninsured health care costs during retirement.” This brings us to our third point.

3. Guaranteed Retirement Income: Erin talks about the power of annuities after 1999. There are some strong arguments for using these types of products for your guaranteed retirement income. To deviate a bit, I have used the concept of infinite banking for guaranteed retirement income. This is by far the strongest way to build a solid nest egg and be in full control of your money. Treating investing like a business is the true path to success. Both methods use insurance products that provide a guaranteed return on investment. The financial gurus who are in favor of mutual funds will reject this idea because the guaranteed returns may be less than the market returns in CERTAIN years. I can tell you from personal experience that the dot-com crash and financial crash of 2008 did not affect my banking system, but some of my investments in the stock market went to the bathroom. My guaranteed portion came out unscathed.

The great risk of retirement shows you that survival of the fittest and nature dictate what happens in life. You must prepare accordingly. Erin describes in the last section 22 low probability / high impact events that you need to be protected from. That part alone makes the book worth reading.

I hope this short summary has been helpful to you. The key to any new idea is to incorporate it into your daily routine until it becomes a habit. Habits are formed in just 21 days. One thing you can take away from this book is guaranteed returns. You need to research insurance products and find out if they will work for you. Also, understanding the savings / investment strategy for needs, wants, likes, and wishes is very important if you want a secure future.