What an exciting title- to a fantastic proposition. A cash flow retirement is entirely different from what mainstream media would like us to have. Conventional wisdom would have us save an arbitrary amount of money, say $1 million, and then live off this money by withdrawing cash.
In this scenario, you SAVE $1 million by having a portion of your money removed from your paycheck. Once you hit retirement age, you withdraw your money, making your mountain of cash shorter each time.
I do not like the word “save.” Saving money is excellent and a necessary evil, but creating money is the best way to ensure the future of you, your children, and your grandchildren. What is the difference between saving money and making money? Let’s look at the differences.
Millennials, Homeownership, and Kids
Saving money.
1) Automatically withdraws money from your paycheck.
2) Teaches you to live with less money.
3) Uses time as the only compounding element.
Creating money.
1) Can automatically invest money into dividend-paying stocks.
2) Teaches you to build passive income from a business, real estate, and investing.
3) Uses financial education, snygergy, and time as the compounding elements.
At my age, 40, I have all kinds of people approaching me telling me that they are debt-free and have $XX amount of dollars in their 401K. That is truly amazing, really, but what does that mean? I try to understand these statements’ actual value, but I don’t understand the underlying metrics.
So, you are debt-free. Amazing. So what happens when you have to take on debt? Life is full of surprises, and if you have children, even more surprises. Being 40 and debt-free, I know that life will be expensive moving forward, even more costly than when the kids were younger.
Say that my son wants to purchase a home and needs $20,000. If I never learned how to create money, my answer would be, “Son, I am debt-free, and giving you $20,000 would take away from my savings. Or I would have to borrow the money, which would create some debt. I only know how to pay off debt with time and earned income. Sorry I can’t help you.”
Cash Flow 104: Create You Long Term Strategy
Next, I hear about these enormous amounts of money in 401k accounts. Again, what does that do for you? It guarantees that you will have some cash once you turn 59+. The only way to withdraw money from TSP, 401k, or Roth IRA, is by selling shares. That means your money mountain will decrease every month. It also means that you are at the whim of the stock market for your withdraws.
I am not saying that retirement accounts are bad, quite the opposite, but they are just the beginning. They are savings accounts, nothing more, nothing less. They give you some tax benefits and the compounding effect, but view them as a starting point rather than the end-all-be-all. Don’t worry, I have a Thrift Savings Plan account, and I haven’t checked it in 8 months.
Happy Cash Flow Retirement. Let’s take a look at my retirement plan as of 2021. Again, I am 40 years old today. I have 25-30 years to keep adding more and more income streams. It is almost ridiculous how many assets you can accumulate once you know how.
| Asset Category | Type |
| Retirement Planning | Military Pension |
| Thrift Savings Plan (401k) | |
| Roth IRA | |
| Investments | High-Yield Savings Account |
| Treasury Bonds | |
| Fundrise REIT | |
| Dividend-Paying Stocks | |
| Real Estate | House #1 Arizona |
| House #2 Florida | |
| House #3 Florida | |
| Business | Website |
| Affiliate Marketing | |
| Kindle Books |
Ladies and Gentlemen, I am just getting started. These assets are paying me today, right now. I receive paychecks from these investments monthly. The cash flow will continue long into my retirement years and my children’s life spans.
Print Your Own Money
How do you build a cash flow retirement? You have to be active to become passive. This statement means that you have to actively learn about finance to build passive income. Lack of financial education is the number one reason why people do not have passive income. It takes effort to get ahead and stay ahead of life.
Let’s go back to our son needing $20,000. With access to cash flow, you have many options to assist. But better yet, you have built up the financial education to teach him to help himself. Can he buy a car for a rental business? Can he rent out a room and invest in the stock market? Can he start a business? Can he use leverage to bring income today? These are all things you will learn in your quest for passive income.
Taxes 103: Real Estate for the Win!!
Here is a typical month of paychecks from our cash flow retirement plan. Yes, the program is already in effect because we have assets generating us income TODAY.
Employments. I have my military income of two paychecks a month. My wife has two paychecks a month from her job. I also teach military personnel on the side, earning me two paychecks. When we officially retire, these paychecks replicate retirement checks and TSP withdraws. Altogether, this plan is most people’s standard retirement plan.
Investments. We get paid roughly 50 dividend paychecks a month. Most are around $1-2, but some are $30-50. Can you imagine getting a dividend from AT&T for $40 and being able to take your spouse out to sushi with this cash? That is the excitement of dividend investing and creating cash flow. We also get paid interest and dividends from High-Yield Savings, Treasury Bonds, and Fundrise Real Estate Investment Trust.
Real Estate. The king of wealth generation is real estate. We get four real estate paychecks a month—the best being the two from renting out our master suites. Every month we have $1,600 of completely free income- the hard part is deciding its future. Most of the time, it ends up in the investment accounts, but if we need it in real life, we can use it there. Cash flow gives you choices.
How to Become a Land Millionaire
Business. Building businesses gives you various ways to create wealth. Right now, I am focused on creating royalties from books and a corresponding website. This world moves slow, but once it gets going, it can be a source of passive income for the rest of your life. Right now, I get paychecks from Amazon Kindle, Affiliate marketing, and Google AdSense- for showing ads on my websites. Once I get more traffic, more options to monetize will open up. Right now, I am working on building up a ton of content- that is the key.
As you can see, cash flow is the superior method. You still have everything you love about saving in a 401K, but you can multiply by all the other benefits of different income streams. The main thing that holds people back is a lack of motivation to create passive income- these techniques are not particularly difficult.
How do you get started with passive income? Education is the key, and for me, reading is paramount. From there, you can try to jump in or take some online courses. Be warned, don’t take forever to make a move. You cannot figure out where you are going until you get on the road. I will leave some book recommendations below, including two books I wrote on “Happy Cash Flow Retirement.” Good Luck!
Financial Mindset: Unfair Advantage
Retirement Planning: Before You Quit Your Job
Investments: How to Retire from Dividends
Real Estate: Zero Down
Business: Company of One
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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