The average person needs to have a plan for retirement. Yes, this means that you actually need to formulate a path towards getting older and surviving.
Retirement is coming for all of us, and no one is coming to save us. Social security is NOT a retirement plan. It’s a questionable backup resource—at best.
I will discuss the “combo retirement” today as a way to start thinking of your strategy. Welcome back to the Retirement Planning for the Average Person series (part 1, part 2, part 3).
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What is the combo retirement? You cannot depend on one source of income for retirement. Income streams can fluctuate in value or amount. The economy changes daily, and things like inflation, recessions, and bear/bull markets all shift constantly.
Thus, your job as an average person is to prepare for the unknown. The “combo retirement” uses multiple income streams to ensure your wealth grows beyond your needs every year. Let’s review some combo retirement ideas.
- Dividends/Royalties
- Pension/Dividends
- Royalties/Rents
- Rents/Dividends
- Interest/Rents
- Rents/Interest
- Business/Rents
- Business/Dividends
- Pension/Business
- Pension/Dividends/Interest/Rents/Royalties
Build your own combo. You want to form combinations into disparate sectors or industries. For example, we consider dividends and interest “paper assets.”
You don’t want to retire with only paper assets as your sole income stream. If the bond market or stock market has a bad year, you will feel the pain if that’s your only source of income.
To start your combination, you want to focus on one income stream until it starts to produce massive cash flow.
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A quick example. Let’s start with a dividend portfolio focused on generating income. Once we get to $1,000/month, it’s time to create another income stream.
We can use our dividends to purchase a vending machine that will cash flow $300/month. The vending machine counts as an automated business.
We can build an army of vending machines over a year or so. In a few years, we could have $1,500/month in dividends and $1,500/month in vending machine income.
Having $3,000/month in income is an excellent start to building a wonderful retirement. Then, and only then, should you think about how social security can fit into your strategy? Social Security comes last in our planning.
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Multiple streams of income. You want to diversify your passive income, especially during retirement. I am aiming to achieve 5-10 income streams during retirement.
I am 41 years old, and anything I invest in today has a few decades to grow. So I am investing in a business via a blog and book publishing. I also have cryptocurrencies, dividends, and bonds. Finally, I own three homes that produce sweet rental income.
What are your interests and hobbies? Whatever you love doing is what you should focus on to make money. Remember, it doesn’t need to be a large income stream. Even $500/month is enough to change your life.
Start a gardening blog or YouTube channel if you like to garden. If you want to sew or knit, you can create a channel and also sell your wares.
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You want to build your income stream at least ten years before retiring. Ideally, twenty to thirty years is an even better time frame. An excellent place to start for your age group is my Retirement Planning at Any Age series (20s, 30s, 40s, 50s, 60s, 70s).
Combos that compliment each other. Find two combinations that work well together. Dividends work well with everything because you create them from cash flow.
Therefore, dividends should be a part of every scenario for your retirement. If you don’t know about dividends, start with this free book, “Dividend Investing: Back to Basics (free pdf).”
Dividends will be your lighthouse during retirement and also your safety net. You must divert any cash you earn towards building a massive dividend portfolio. This will guarantee you benefit from the power of compounding.
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Learn about the different income sources. Now is a great time to reintroduce my Living Overseas with Passive income series because I will discuss each income stream.
- Living Overseas with Dividends
- Living Overseas with Royalties
- Living Overseas with Rents
- Living Overseas with Cryptocurrencies
- Living Overseas with Automated Business
- Living Overseas with a Pension
You don’t need to move overseas to enjoy this series; however, you need to understand where you want to live. If you plan to retire in California, it’s much more expensive than in Alabama.
Look at different areas and build your combo retirement strategy to make at least twice as much as the cost of living. My article, “Overseas vs. Homestead vs. Small City,” breaks down some lower-cost living ideas.
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If you want to retire in California, you’ll need at least $20,000/month in passive income—if not more.
Your retirement takeaway. You should be able to write one sentence that covers your entire retirement plan. For example, “I will live in Alabama with $5,000/month in passive income from dividends and royalties.”
In your sentence, you have “location / amount / income stream 1 / income stream 2.” Now you try. Here is my family’s retirement sentence. “We will live in Turkey with $20,000/month in passive income from military pension, dividends, rents, royalties, and automated business.”
Conclusion. I want it all. I want as much income as I can conceive. Am I being greedy? Perhaps. I know I am being cautious.
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I do not know what the future holds, so why would I slow down my progress? Why would I limit how much money I want to make in the future?
The truth is, once you learn how to create money, it’s your responsibility to do so. Your kids or grandkids may not be able to generate income because of a disability. Wouldn’t it be nice to provide them additional support with your own resources?
We don’t know where the public school system is heading. We don’t know if there will be more wars and recessions. You’ll need money no matter what the future holds.
Start working on your retirement sentence today. Then, simply start your combination retirement. Open a blog, invest in McDonald’s, or fund a USDC account—it really is that simple. 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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