They told us that if we worked hard, were smart with our money, and planned well, we would have a great, exciting retirement. How is that working out for you?
The 40-40-40 plan involves working 40 hours a week for 40 years and receiving 40% of your income during retirement. That was the plan they sold us.
Changing plans. I was solidly on the 40-40-40 plan from age 18-38. I joined the Marine Corps at age 18 and planned on doing 30 years. After my military retirement, the plan was to do another 20 with the federal government.
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Then I read “Rich Dad, Poor Dad.” Everything changed after reading that book. I could no longer close my eyes and expect the government or a company to support my retirement dreams.
Shortly after reading Robert Kiyosaki’s masterpiece, I created my own formula for retirement success: Happy Cash Flow Retirement (Part 1, Part 2, Part 6, Part 7, Part 8, Part 9, Part 10).
Over the past five years, I have written extensively about leading a happy cash flow retirement, and each time, I get more excited.
In fact, I am living a Happy Cash Flow Retirement today. I retired from the Marines in September 2023 at the age of 42, and I haven’t looked back.
Switching mindsets. Most people subscribe to the 40-40-40 plan because they taught us to work hard for money.
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Most people believe that their contribution to society and their families comes from their ability to work and earn money from a company or the government.
When you speak to 40-40-40’ers about retiring early, most will scoff at you. They believe that the only way to make money is from a W-2 job.
They only know how to make money by looking for a job, interviewing, onboarding, and finally receiving a paycheck.
I used to think this until Robert Kiyosaki convinced me otherwise. He taught me that we can all provide value to this world, and we don’t need a job to do this.
Speaking the truth. Don’t get me wrong; the large majority of us will need to work for a large portion of our lives. Unless you are a trust fund baby, you will need to work.
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However, we don’t need to subscribe to working for 40+ years simply because we don’t understand how money works.
A 40-40-40’er will work toward a pension or 401K and supplement that with social security. This is a solid plan, but what if these things went away?
What if the company pension dries up, the stock market tanks your 401K, and the government reduces your social security benefits by 50%?
Now, you must learn how money works and how to add value to society. Robert Kiyosaki always said that having a job is much riskier than being an entrepreneur.
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Getting started. You don’t have to quit your job to start building a Happy Cash Flow Retirement. In fact, you probably shouldn’t leave for a long time.
However, there are things you can do to add extra income streams to your lifestyle. To summarize, a Happy Cash Flow Retirement consists of multiple income streams from various categories. Let’s review some different income streams you can pursue.
Investment income. You will want to make your money work for you. There are many ways to invest your money, including dividend-paying stocks, growth stocks, and cryptocurrencies.
The key is that you want most of your investments to pay you passive income through interest and dividends. After five years of investing, my wife and I earn $2,000 per month in dividends.
You can become more extreme by trading options, day trading, or foreign exchange trading. You can also collect valuables that you may sell for a higher price later (speculation).
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Rental income. Another great way to earn additional income is through real estate ownership. You can rent properties to families or do Airbnb or short-term rentals.
I personally love having roommates as a way to earn rental income. Yes, it’s tough to find a good roommate, but it’s free money if you can.
You can also rent your yard, garage, car, or parking space to generate rental income. Some people even rent their clothes to make passive income.
Business income. You don’t need to start a mega-corporation to earn business income. You can buy an ATM, arcade machine, or vending machine.
You can open a passive business like a car wash or parking lot. You may want to start a food truck or franchise a restaurant.
The goal is to start a business that suits your interests in retirement. This could be coaching, consulting, or mentoring.
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Creativity income. I love being creative. For so many years, I worked at a job that required me to get things done in a unique fashion. However, I never considered myself creative.
However, Robert Kiyosaki said that creative people have the ability to make money from thin air. He is right. I can create a book that sells—all from the knowledge I have stuffed in my brain. Amazing stuff.
Taking the creative route requires the least risk but the longest amount of time. It’s a trade-off. You’ll need to develop many skills outside your creative talent to sell products or services in the free market economy. But it is worth it.
Putting it all together. Let’s say you retire at age 62 with a total of $6,000 monthly from your 401K, pension, and social security.
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I highly recommend that you live below your means with this $6,000. You should be able to save and invest from this income alone. However, we can add our additional income from our Happy Cash Flow Retirement.
- Investment income: $1,500/month from dividends.
- Investment income: $500/month trading options.
- Rental income: $1,000/month from renting a room.
- Business income: $1,000/month from consulting.
- Creativity income: $500/month from a blog.
In addition to our $6,000 from the 40-40-40 plan, we are earning $4,500/month from extra income streams.
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Conclusion. On top of the income, these streams also keep us engaged with family and our community. We are adding value, meeting new people, and building something our heirs can inherit.
People always ask me what I do in retirement. I tell them that I “mind my business.” I have plenty of work to do with dividend investing, options trading, book business, renting houses, and attending college (GI Bill).
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My goal is to keep growing my income and net worth while building a legacy for my sons to follow. That’s why it’s crucial to convert from a 40-40-40 scarcity mindset to an abundance mindset within a Happy Cash Flow Retirement.
The 40-40-40 plan isn’t bad, but it won’t get you the results you desire. Even worse, your kids probably won’t be able to replicate your success using the 40-40-40 plan.
Their future will look more like a Happy Cash Flow Retirement, where they will string together multiple income streams to build the life they want.
We can assist them by first learning about investing, business, real estate, and creativity. In the end, you’ll become the person of your dreams. Good Luck!
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