How Much Do You Need for Retirement? Part I: Introduction

How much money do you need to retire comfortably? In typical American retirement language, they would give you some random lump sum amount of cash that you would need. Usually, they take 70% of your current income and multiply it by 25.

For example, if I make $100,000/year, I would (by their standards) want to make $70,000/year in retirement. If I multiply that by 25, it will give me $1.75 million. Then, they would tell me I have until age 65 to keep working towards this goal. 

Hogwash. If you haven’t guessed, I am not a fan of this system at all. It assumes too much and gives you very little credit. It assumes that you will retire with less money than you will earn in your working years.

Create a Never-Ending Stream of Content

I do not know about you, but I want to be rich throughout my retirement years. I want to be making so much money that my wallet hurts. I also want to make this money passively so that I can spend every minute with my family. 

Their method also assumes that you will want to work until age 65. Is that something that you will want to do? I, for one, do not even want to work past 50. I started late in my pursuit of financial independence, but I can achieve every goal I need to because of my self-education. 

One last thing that sucks about their system is that it relies entirely on the stock market. Your $1.75 million can turn into $1 million rather quickly because it is all based on capital gains. Capital gains are all unrealized until you actually sell your stocks and take the proceeds.

Imagine hitting retirement early with your target amount because of a bull market (the stock market is doing well). You retire at age 60 and are living a good life. Then, the stock market crashes by 50%, and you now have less than $1 million. Do you go back to work? How can you accelerate your wealth creation without a job?

And therein lies the biggest problem with the standard American retirement mantra, you have no control of your wealth creation. You are told to be a good employee for over 40 years, put all your money into the stock market via 401k plans, and pray that it all works out by the time you turn 65.

How to Create “Luck” with Money

Even worse, the 401k and IRAs have limits, so if you are doing well, they limit you on how much you can tuck away for retirement. Let’s do a quick recap. 

To retire under the standard American system, you need to work a job until 65 years old. You are limited to how much you can invest, and your money is all tied up in the stock market. You have very little control over your speed of wealth creation. You are an outsider in your own retirement plan. 

So Josh, is there a better way? Yes, there is; it’s called Cash Flow. Cash flow is the two most important words to your dream retirement. We achieve cash flow via five separate asset classes, employment income (pensions), investments (dividends), real estate (rents), business (automation, royalties), and cryptocurrencies (interest). 

Let’s go back to the original question, how much money do you need for retirement? The answer was $70,000/year. Forget that! We are going to extract $70,000/year from each of our asset classes. That is (rounded) $360,000/year or the equivalent of having $8.75 million invested.

Can we reach this extreme number? Of course, we can. We will be rich as soon as we get $1 million, so the rest is just because we want to see big numbers. We will reach these cash flow numbers by doing what I call active investing.

What is a Sales Funnel

Active investing is the art of seeking wealth generators to fund your investment portfolio. A wealth generator is something that creates an excess amount of money. Let’s look at my current wealth generators. 

1) The military is my first wealth generator. Not only are they paying me $140,000 a year, but the longer I stay in, the higher my pension is. So, not only am I investing almost 90% of my current pay, they will continue to pay me for the rest of my life, well after I retire at age 48. Not a bad deal. 

2) Renting rooms is another great wealth generator. My wife collects $1,600/month from renting our two huge master suites. Renting rooms is the purest money on Earth because it is minimal work with maximum profits. I accredit renting rooms for helping us achieve financial freedom by age 40. 

3) Royalties from books are another huge wealth generator. Currently, I make roughly $40/month from my readers. However, I figure in five years, I can be making approximately $5,000/month. So not only is it cash flow, but since I don’t need this money, it can help fund my dividend and crypto portfolios. Books are free to produce.

From -$77,000 to +$150,000 in 22 Months

Now, the idea of active investing is to create even more wealth generators. As a matter of fact, you should never stop making wealth generators. I write about ways to keep the money flowing through things like a dog park, buying an 18 wheeler, and starting a rental business.

There are an unlimited amount of wealth generators out there. I do not focus on the actual dollar amount from each one. I look at the amount of work it requires and the amount of pure profit from the venture. For example, I may bring in $700/month from renting out a Ford Mustang, but it requires little work. Therefore, I can leverage my time to start another wealth generator. 

So, this series aims to make $30,000/month combined from our five asset classes. Can it be done? You bet. We will systematically review how to get there from each category. I will start with the two biggest wealth generators, business, and real estate. 

We will need to create an excessive income to fund our Roth IRAs, dividend, and crypto portfolios. 

So put on your thinking caps, and let’s proceed into the world of cash flow and wealth generators. If you can get the basic concept down, you will continually seek more sources of income. 

As someone who is building my cash flow through royalties, I can tell you that it is gratifying to create something so powerful from nothing. Outside of being married (and family), there is no feeling like building an income stream. We can all learn together and build a $30,000/month cash flow retirement portfolio. Let’s go!

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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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