The Retirement Savings Fallacy
Hi, this is Gordon. Many folks are under the misconception that saving up enough money will handle their retirement needs.
Surprisingly, this is an entirely erroneous view that I address in a controversial article here.
SIDEBAR: That article got me a ton of comments. From investors, almost all highly positive. From financial planners, not so much. Read it and you'll see why!
To retire in comfort and security you need passive income, also called residual or recurring income. This is automatic income that you don't have to keep working to earn an can derive from a variety of sources (see lists below).
The traditional form of income is transactional income which is money you barter hours of your time for, whether as an employee or self-employed. Stop working and the money stops. Get sick and the money stops. Here you have no leverage. You get paid what an employer is willing to pay you. And there only so many hours in a week, so your income is always limited and 100% dependent on you to keep performing.
The definition of retirement is to be able to cease working for transactional income and have 100% of your recurring expenses covered by passive income. Once your passive income exceeds you're expenses, you're free to decide what you want to do with the rest of your life. This can occur at any age, whether 25 or 75. The more diversified the streams of passive income you have in place, the more secure your retirement will be.
This is passive government income that you may not be old enough to start collecting yet.
When you are, the program may no longer exist since it's bankrupt already. The reason being that the government doesn't actually set aside the employment taxes you pay. It all goes into the general ledger and is spent as fast as it arrives.
This is passive income from a form of whole life insurance that you typically set up years in advance. If you haven't done this already, and if retirement is rapidly approaching, an annuity probably won't help much,
This is passive income from a pension plan associated with a current or former job, whether in the public or private sector. Many pension programs today are in perilously frail condition.
Passive Income Sources
While not purporting to be a complete list, the following are among the traditional sources of passive (residual, recurring) income.
* Bank CD
* Social Security
* Stock dividends
* Investment real estate
* Artist royalties / residuals
* Private or government pension
The following little known and understood sources of generating passive monthly income are methods which I personally provide and support.
* Live currency trading
* Relationship marketing
* Automated investing software
* Lead generation for small business
Let's look at these, one by one.
Artist Royalties & Residuals
These are recurring payments you receive as an author, songwriter, actor, etc.
Every time you hear Love Me Tender in an elevator, Elvis Presley's estate makes a few cents more.
Author Steven King gets paid every time someone, somewhere in the world (translated in many different languages) buys a new copy of one of his numerous books.
There was a time when bank certificates of deposit (CDs) paid upwards of 18% a year and a $100,000 bank CD would generate $18,000 in annual passive income. Today they pay (as I write) just 1.5% a year, so $100,000 generates just $1,500 annually and won't pay many bills. Worse, real inflation is currently running above 4% annually. Meaning that inflation will consume your 1.5% bank CD by the end of March. Not a helpful way to retire.
Many stocks pay out annual dividends for passive income and are terrific while they last. However, the U.S. stock market historically has crashed an average of every 14 years or so, with an average drop of over 40%.
When the market crashes again (and it will), dividends will go out the window. Stock dividends cannot be counted on for secure, long term retirement income. Even when the going is good, most dividends barely make up for real inflation.
Real Estate Investing
Owning an assortment of apartment complexes or commercial real estate can generate a substantial monthly stream of passive income. The downside here is that most folks lack the capital to make this happen.
This is rigorously tested and proven software that I've co-developed based on my now 16 years of experience as a currency trader.
WST-40 automated currency trading software offers the potential for consistent investment returns that can be truly life-changing once the risk factors are understood. Interested parties are welcome to contact me to set up a demo trial of the software for just $27 a month. This is a case of "seeing really is believing."
Click here for Frequently Asked Questions
If you don't have any of the above passive income streams to look forward to, you need to start creating your own streams of recurring income. This is where I can help. I have devoted the past 30 years of my life to researching and creating systems of passive income both to secure my children's futures and to help others. They are as follows.