Another day, another dollar; better yet, another passive income dollar. In two weeks, I am retiring from the Marine Corps after 24 years of service.
I have never been more excited in my life because this is the result of hard work and planning. I have wanted this outcome since I began writing about passive income in July 2020.
There has never been a better time to reflect on the principles of passive income and lay out my initial plan for my Happy Cash Flow Retirement (Part 1, Part 2, Part 6, Part 7, Part 8, Part 9).
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What retirement means to you. The first step in planning my HCFR was deciding what retirement looks like to me. It’s nearly impossible to retire if you don’t know what it looks like.
The most important part of my HCFR was having freedom of time, money, and movement. This meant I didn’t want anything to tie me down or waste my time.
I made certain decisions, such as becoming a writer, because it allowed me to conduct business at any time of the day. I also focused on building my dividend portfolio because dividends are the most passive form of passive income.
What does your retirement look like to you? Who will play a role in your day-to-day operations? Where will you be located?
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Starting with your base retirement income. Every retirement needs a base source of income—this will be your primary source of revenue.
My main source of income will be my military pension. After 24 years, my retirement will be substantial, especially living in Florida.
Your main income may come from a 401K, Roth IRA, annuity, state pension, dividend portfolio, or social security (please don’t depend on SS).
It’s essential to identify your primary source of income because you want to feed this source early and often. For example, you want to maximize your employer match on your 401K or contribute the maximum amount to your Roth IRA.
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Once you identify your main source of retirement income, you can add additional passive income streams to supplement your retirement.
Investment income. Everyone needs to open a traditional brokerage account sooner rather than later. Yes, this is a taxable account, but hear me out.
You can do two things within a taxable brokerage account: dividend investing and options trading.
The excellent part about dividend investing in a taxable account is that you can utilize the income today and tomorrow.
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You don’t need to wait until you are 60 to leverage your dividends. You can use them today to make your life easier and more enjoyable.
You can also learn how to trade options safely using covered calls and cash-secured puts. You can add 5-10% more income to your portfolio by safely trading options.
You can wrap up your investment income by investing in long-term Treasury bonds. These government bonds can give you more security than having only stocks.
Rental Income. Buying a home has been more difficult than ever, but don’t give up. That means buying a rental property is twice as hard.
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No worries; it has become much easier to create rental income. There are countless ways to earn passive rental income by renting your space or items.
You can rent your yard, rooms, guest houses, or cars. The more you think outside the box, the more revenue you can generate.
However, it’s difficult for most people to let their things “go.” They believe that things are vital to their happiness.
The most important thing to your happiness is the people around you. It’s even better when you have the income to enjoy your time together.
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Therefore, removing any negative attitude about renting your garage, car, land, etc, is imperative. In the end, you want to generate income that you can invest in dividends to make even more income.
Royalty Income. We all have a creative side and must leverage it during retirement. Most people will never create anything.
I worked for the government for 24 years and didn’t explore my creative abilities until three years ago. However, my creative pursuits have been a magical journey that I wouldn’t change for the world.
Building a portfolio of creative works isn’t about generating a massive income stream. It’s about gathering everything in your life and exploring new dimensions.
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I know it sounds abstract, but you become a creator by creating. For example, I read about options trading long before I begin trading options.
I felt compelled to start trading options because I wanted to write about my experiences. My creative needs pushed me to achieve something in real life.
If you have a garden, try new herbs or plants so you can write about them. Or you may travel to a new location so you can record it for YouTube.
Being a creator challenges you every day to create new content. This path is the meaning of life and a great way to spend your retirement (and earn more revenue).
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Business income. If you want to have a secure retirement, you will need to have a business. It doesn’t need to be big; it can be a solo business.
Having a business allows you to generate income through your corporation. There are many tax benefits to having a corporation or even being a sole proprietor.
You can put your rental property or car into a corporation (LLC). You can also incorporate your creative works like books, websites, and music.
The more you understand business, tax, and real estate laws, the easier your retirement will function. There comes a time when protecting your income is just as crucial as earning it.
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Putting it all together. Your Happy Cash Flow Retirement starts with your dreams. You can build your dream house without having blueprints. It’s the same for retirement.
Next, you want to establish your main source of retirement income. Ensure you have a solid handle on how you will achieve your goals within this bucket.
From there, you will want to keep adding income streams as required. Even when you feel you have enough revenue, keep adding more, even if they are small.
Conclusion. Inflation is the cost of being alive; the minute we stagnant, it can overtake everything we build.
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We want to diversify our passive income because an income stream can dry up, and another can flourish—we just don’t know which is which.
Retirement is not what you think; it’s more than you can imagine. It’s not about kicking your feet up and binge-watching Netflix.
It’s about creating something you couldn’t while you worked. It’s about legacy and grandkids. You want to accomplish the things on your vision board.
However, everything costs money. You must be one step ahead of inflation, recessions, taxes, and cost-of-living adjustments.
Your Happy Cash Flow Retirement depends on you and only you. The more you know, the more you grow, the more you Cash Flow. Good Luck!
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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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