It’s your retirement; make it how you want. With that, how do you envision yourself in retirement? Are you with a loved one or family? Where are you located? And, how much money do you have or need? These are all questions you should be asking yourself every day.
I have a few housekeeping notes before you get started. The first part of this series is called “Retirement Planning at Any Age (Amazon).” I changed the name and the scope of the series.
This series will be a collection of all the articles I’ve written in the Retirement Planning category on my blog. In this case, 60+ articles. My blog has six different categories: financial mindset, retirement planning, investing, cryptocurrencies, real estate, and business.
You can find the other massive collections on my website for free. I also have them up on Amazon if that is your preferred reading method. Here are the details on those.
- Financial Mindset– “Become CEO of Yourself 2” (free pdf)(Amazon)
- Retirement Planning– you’re here
- Investing– “How We Plan to Retire on Dividends 2” (free pdf)(Amazon)
- Cryptocurrencies– “Counting on Crypto” (coming soon)
- Real Estate– “Financial Independence through Real Estate 2” (free pdf)(Amazon)
- Business– “Retire Rich, Retire Comfortable with a Business 2” (free pdf)(Amazon)
Wow, that’s a lot of content. It’s impressive how doing something like writing every day can produce such massive results. We can say the same about retirement planning. We need to work towards retirement every second we breathe.
Budgeting & Becoming Debt-Free
Living on a budget can be one of the top ways to ensure we have money to invest. Investing is how we build our money system that we can eventually use to retire. Budgeting also helps us prevent the golden handcuffs of lifestyle inflation. If our lifestyle balloons with our income, we force ourselves to indefinitely stay in the rat race.
Part of budgeting is knowing when to USE and when NOT to use credit cards. Avoiding credit card debt can save you a ton of heartache. Trust me; I speak from experience.
If you are in debt, relax, it’ll be okay. Take a deep breath. The hardest part of being in debt is identifying the true extent of your financial troubles. After that, you can begin your debt pay-off journey while also learning to avoid toxic consumerism.
It may take a couple of years (it took us that long), but you will eventually get out of debt. Can you imagine rolling into Christmas time and being debt-free? You can have a tremendous stress-free shopping experience. You’ll get there.
Once you are debt-free, there is still much to accomplish. Now, we still need to reduce expenses and increase income. Don’t rest on your laurels just yet. The minute you stand still, inflation will catch you.
I love reducing expenses because it prevents lifestyle inflation and gives us excess cash flow to invest. To reduce costs, you need to over-budget (and over budget some more) to get the results. You don’t necessarily over budget for the rest of your life, just until you have a substantial amount of passive income.
Now that you are on track, you can look at the bigger picture. How much do you need for retirement? I like to ask how much cash flow you need, not a fixed amount.
Thus, this launches you into the wealth accumulation phase—no more debt and bad purchases. Now it’s about building wealth through investing, business, and streams of passive income.
Good Financial Lifestyle
Accumulating wealth is about living a lifestyle conducive to building wealth. If you want to live like a rapper or ballplayer, chances are you’ll run out of cash pretty quickly. These three steps will allow you to transition from surviving on earned income to thriving on passive income.
Part of reducing your financial footprint is managing your household correctly. It is hard for a married couple to get ahead financially. I have a wife and two kids, so I know all about the struggle. However, when two people get on the same page, there is nothing that can stop you.
Trying to get ahead financially with only one income stream can be challenging. The average millionaire has seven streams of income—how many do you have? You’ll have to grow your income streams to beat inflation and get ahead of the power curve. You can start by investing in dividends and renting a room—that is already two more streams.
The rich’s mindset is vastly different from that of a poor person. 80% of becoming wealthy and acquiring assets is your mindset. I like to ask myself additional questions to ensure my mind stays sharp. Questions like “How would I spend $5,000?” and “How Would I Invest $300,000?” allow me to diversify my future passive income. If I don’t have the answer, I have to do some reading.
Yes, I talk about living on passive income every day, but the truth is you need a job. You need a job because you were not born with assets. As we build our base of assets, we need to pay expenses. We can use our earned income to fund our money system as well. We can also use our job to support us as we grow our business.
The goal of working and retiring is to live the laptop life eventually. The laptop life is the idea that you can make money from anywhere, as long as you have an internet connection. This means you want to start an online business while working and build a dividend portfolio. You may also like to learn how to trade options to make even more passive income.
Before we can live the laptop life, we need to learn how to live paycheck to paycheck. No, I am not talking about earned income paychecks; I am talking about dividends and royalties. We need to build up our passive income “paychecks” and use them to fund our lifestyles—no more bosses for us.
Beating Inflation
As you become a sophisticated investor, we will learn to mitigate inflation. Some people like to hedge inflation with bonds. I want to make as much passive income as possible. I do this with royalties, rents, dividends, and cryptocurrencies. I follow these five rules to help me beat inflation.
If you are doing everything correctly, your income should increase every year. In 2019, my wife and I made $140 in dividends, 2020 was $1,234, and 2021 was $5,072. How remarkable is that growth? Think about how much we will make in dividends in 30 years.
Another way to beat inflation is to get a higher-paying job. However, you probably need a college degree for this new job. Would it be better to become a content creator? Would you make more money working from home and building a brand? In my opinion, yes, if you are genuinely dedicated (about 3% of the population).
Retirement Planning
Now, we are budgeting, living below our means, and tracking inflation; what’s next? We need to start working towards retirement. The average person has no clue what retirement will look like for them. I created the retirement planning for the average person (part one, part two, special edition pdf) to help folks envision a life without working—a life of freedom of time, movement, and finances.
I was born and raised in San Diego, California (back in 1981). However, the idea of retiring there is not on my list of things to achieve. That doesn’t mean that it is impossible to retire in California. It just requires you to become a sophisticated investor and passive income expert. I like to use California as an example because if you can retire there, you can retire anywhere.
Speaking of retirement, I had a chance to take a 60-Day Pre-Retirement experiment. I was home on leave (from Japan), living on my active duty paycheck (soon to be a pension), dividends, rents, and royalties. Spending the beautiful Florida days with my lovely wife is something I will always treasure. Today, we have even more passive income streams. This is how I envision my Happy Cash Flow Retirement.
Dividends are a massive part of my retirement plan. I just love the feeling of building wealth through dividends. There is something so sexy and cool about getting dividends at all times of the month. But, I always like to compare dividends to other sources of income. I compare them to annuities and a military pension to see which could be better in the long run.
In the end, you want to retire as a well-rounded millionaire. To me, that means having at least $120,000/year in passive income. That is $10,000/mo in passive income split between rents, royalties, automated business, cryptocurrencies, pension & ROTH, and dividends. We can all reach these numbers if we focus and eliminate the crap from our lives.
Passive Income
So, let’s dive into the meat of passive income? What is passive income? It is income where you do most of the work upfront and reaps the benefits over time. Writing a book is probably the most straightforward example to use. Last month, my wife and I hit $1,100 (not including rents) in passive income. You can follow our journey in a couple of articles I wrote. Over time, I will keep sharing until the numbers seem absolutely ridiculous.
The magic of passive income is that it frees your time to build more passive income. Just like I will use my military retirement to free myself from working, dividends can serve the same function.
Many people try to build a giant nest egg or a large amount of equity in their home, but what does a static number do to pay expenses? The better measurement is how much passive income your portfolio pays you.
If passive income is still elusive to you, I wrote a series titled How to Create Passive Income (beginners, intermediates, advanced, average person). Following this series (in order) should help you get some ideas and see what income streams interest you the most.
But don’t get it twisted; building passive income is a grind. The passive income grind is something most people can’t do because results come later. I am writing 1000+ words a day for at least five years, and I don’t expect to see the results until that fifth year. However, at that time, I can relax a little and let the power of compounding work in my favor.
You would have more than $10,000/mo passive income in the perfect world. I would go as far as to say you will need $20,000/mo passive income to be free truly. You don’t want anything in life to limit you. If your son joins the Marine Corps and gets stationed in Italy, you want to afford to move there as well. Money gives you options. Passive income gives you freedom of movement, time, and location.
Living Overseas Passively
Speaking of freedom of location, let’s talk about moving overseas. I spent 11 of my 23 years in the Marine Corps overseas, and I loved it. Some people want to experience a slower life, where their dollar goes even further than in America.
I love the idea of living overseas on passive income. So much so that I wrote a ten-part series titled Living Overseas Passively (Introduction, Financial Mindset, Retirement Income, Dividends, Rents, Royalties, Cryptocurrencies, Automated Business, Cash, and Conclusion).
If you don’t think you can achieve a healthy retirement in America, maybe overseas is the answer you seek. You can live amazingly well on $3,000-$4,000/mo of passive income. Places like Thailand, the Philippines, and Brazil may offer you some hope.
Book Takeaways
Reading is the best way to become wealthy if you take action afterward. “Get Your Ducks in a Row” gives a detailed look at estate planning. I knew nothing about the topic, so I highlighted almost the entire book. Look for more articles pertaining to estate planning in the future.
“Passive Income, Aggressive Retirement” offers us the chance to use passive income to build out our retirement plans. So, it is a book right after my heart.
“An Expats Experiences of Living in Turkey” is an excellent book on life in Turkey as an Ex-patriot. We plan on living in Turkey for a considerable bit of time, so this book gives me the inside scoop on the landscape. I look forward to reading more books on Thailand and the Philippines.
Conclusion
Wow, that was a ton of information. Again, this comes from the magic of compounding. I just wake up and write, and before I knew it, I have a 60+ chapter book sitting in front of me. Please go download the other collection of books, or grab the all-in-one book titled “Don’t Gamble with Retirement 5 (free pdf)(Amazon)”. Enjoy and Good Luck!
- PDF of the Month: Become CEO of Yourself 2 (Free 196-Page PDF)
- Free PDF Downloads: Download FREE PDF books here
- Financial Mindset: Become CEO of Yourself (book)
- Retirement Planning: Don’t Gamble with Retirement 5 (Free 431-Page PDF)
- Investing: How We Plan to Retire on Dividends 2 (165-Page Free PDF)
- Cryptocurrencies: The Magic of Cryptocurrencies (Free PDF)
- Real Estate: Financial Independence through Real Estate 2 (Free 123-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 2 (Free 185-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever! (book)(Web Edition)(Art Edition)
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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. All Right Reserved Military Family Investing
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