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Whatever retirement looks like for you – no doubt, passive income will have to factor into your equation in some way or another. For most people (like almost everybody), we have to work in order to earn money. At some point in our lives, we will stop working. If this work stoppage isn’t caused by death or incapacitation – it is what is known as retirement.
re·tire·ment /rəˈtī(ə)rmənt/
the action or fact of leaving one’s job and ceasing to work.
Another way to define retirement would be… the period of one’s life after leaving one’s job and ceasing to work.
Whatever retirement looks like for you – you’ll need to be sure to have a plan in place to keep the money rolling in to cover your living expenses. In most cases, this plan will involve some sort of passive income.
Unless you’re a complete dumbass and you decide to retire with no plan. Don’t do that. Don’t be a complete dumbass.
What are the top reasons to retire from your job?
There are many reasons to retire from your job (or career). Listed here are just a few…
- you have more than enough saved in your investment portfolio
- you’ve reached full retirement age and you can max out your government benefits or company pension
- you receive a windfall of money (lottery, inheritance, sale of a business, etc.)
- you can no longer work for health-related reasons
- you are forced out of your job by your employer
This is just a sampling of some of the more common reasons that people retire. There are many more reasons and there are also people who never plan to retire.
It’s your life and you can do with it what you want. Retire early or don’t retire at all. It’s totally up to you. In any case, you must plan accordingly.
What types of passive income are best for retirement?
The best type of passive income for retirement for you depends on…. you guessed it. You! What type of risk tolerance can you handle? How much or how little would you like to be involved in managing your passive income investments?
The most common type of passive income for retirement is investment savings. Typically, this type of savings is invested in the stock market (in mutual funds or index funds). Your financial planner will help you set up monthly distribution withdrawals which provide you with income to cover your living expenses throughout your retirement years. If you’re looking for a mostly hands-off approach – then this is the option for you.
Another type of passive income for retirement is owning rental real estate. If done right, a real estate investment portfolio can be quite lucrative and comes with many tax advantages. You can choose a hands-off approach by hiring a property management company to handle your tenants. Or, you can be more involved if you wish and handle everything yourself.
Since we are in this golden age of the internet – there are countless options available online to help you earn some passive income. For example, if you happen to have an extra garage that you aren’t using for anything – you can easily use the internet to help you rent out your garage to bring in some monthly passive income! This is just one example. The sky is truly the limit when it comes to creating passive income online.
Should I keep working if I already have enough passive income to retire?
Again, this is totally up to you and what you want to do with your life. Do you find fulfillment and joy in your job? Do you love what you do for money? Would you continue doing your job for free if you didn’t need the money? If this describes you – then maybe you are one of those rare human beings who plan on never retiring. Maybe you have more than enough money to retire – but you can’t possibly imagine your life without your job. There’s nothing wrong with working until the day that you die. If that’s what you love – then that is what you should do.
One unfortunate fact of life is that far too many people spend an entire career working a job that they hate – longing for the day when they can finally retire. I hope you’re not one of those people. This life is far too short to be spending your days not doing what you love. If you work a job that you don’t necessarily love, just because the money is good – I would hope that you plan to get out as soon as you possibly can. If you’ve saved diligently and you think you have enough to retire, then do it! Get on with your life and do something else. Do something that brings you joy.
What if I want to retire, but I don’t have enough passive income yet?
So, you want to retire but you don’t think that you have enough money saved and you definitely don’t have any other passive income sources to speak of. It sounds like you’re in a bit of a predicament.
If you’re still young, I have good news for you. You have the advantage of time. You may have no idea how huge this advantage really can be. Has anybody ever told you about the power of compound interest? If you don’t know what that is – I highly recommend you read this story about the multi-millionaire truck driver. You will learn exactly how you can become a multi-millionaire – even if you work a blue-collar job (like a truck driver).
If you’re not exactly young anymore, I have good news for you too. You have the advantage of wisdom. You’ve been around the block a time or two and you know how the world works. You’re not as dumb as the author of this blog and you can certainly figure out a way to create some passive income so that you can retire sooner rather than later. So what are you waiting for? Get to it! Maybe explore this blog a little more and you just might stumble upon an idea that is perfect for you!
Are you stuck and can’t seem to find the right passive income idea for you? Check out this extraordinary list of the best passive income books for timeless inspiration.
The 3 Main Types of Passive Income
Matthew Allen
