Unconventional Wisdom

How many of you have heard the advice, "Go to school, get a good job, work hard, and save for retirement"? OK, the whole room then.

Now, those with your hands up (which is all of you), how many believe that advice to be gospel and are following it diligently? OK, only a few hands went down. The rest of you can put yours down now, too. That's all the questioning for now.

So we see that the conventional wisdom for financial security in retirement is to work hard at a job for 40-plus years, and regularly put away some cash in some sort of an account to grow until you're ready to use it. Sounds good, because you're planning for your future. Nothing wrong with that. But if you want to have a financially free retirement, without cutting way back on your lifestyle, that just doesn't add up. Let's do the math.

Say you work for 40 years and save 10% of your income (more than likely 10% of your take-home pay, or your net pay after taxes and deductions) every paycheck. It doesn't take a genius to calculate that you've saved enough to live for four years at your average income from those 40 years. Don't you want to have a longer retirement and at a better lifestyle than that?

"But," you say, "I'll have fewer expenses when I retire. No more gas and wear and tear on the car for a daily commute; my house will be paid off so no more mortgage payment", and so on, and so on. "Also", you add, "my retirement account will be growing, thanks to compound interest and good investments. So I'll have much more money in there."

All right, consider these questions and, more importantly, their answers:

1. What interest rate are banks paying these days? Um, maybe a whole percent.
2. What's the current inflation rate? Somewhat higher than one percent.
3. Is there any historical precedent of the stock market losing a large chunk of its value in no time at all? Oh yeah, a few, including real recently.

Still feeling good about that nest egg's chances to provide for a retirement lifestyle of which you're certainly going to be deserving after 40 years of hard work?

Before I continue, let me point out that it is a good idea during your working years regularly to sock away some cash for retirement. Who wants to retire with an empty bank account, after all? But the retirement account cannot be your sole source of support during your golden years. It must only be one part of your plan. Especially since, now that you're free to get out and see the country and the world as you please, you want to be able to afford such junkets. So what else can/should you do to secure your financial future?

Passive Income

It's as simple as that. If you want plenty of income to support a full retirement, then during your working years you must invest time and some money to build streams of passive income that will continue working even as you no longer do. Imagine waking up on the first day after you've called it a career and knowing that you're still going to have "paychecks" coming in, the rewards of your efforts of years past to build those passive income streams.

OK, I guess I'd better define "Passive Income" for those of you who may not know the term yet. Passive income, sometimes also called residual income, is that income you earn over and over again as a result of work you did once. For example, an author writes a book once, and over time continues to receive royalties from the sales of the book. Or a musician records an album once, then receives royalties from that album's sales over the years. Or a salesperson sells a product or service to a customer once, then continues to receive commissions on the sale as the customer uses--and pays for--the product or service every month. This last example is likely your best bet for building your own passive income, unless you have mad writing, musical, or acting skills you can take to those endeavors. And let me also point out that, if done correctly, building a passive income stream or two may enable you to retire much sooner than you thought possible. Would you have a problem with that?

So now, I'm sure, you want to know how and where you can get in on this passive income gravy train so you can start securing a more-than-comfortable retirement for yourself. The answer may (or may not, depending on how many of my previous posts on this blog that you've read) surprise you: it's in a business form known as Network Marketing, or Multi-Level Marketing.

Taking a cue from television season-ending cliffhangers, I'm going to end this entry right here in order to keep it from getting too lengthy. Be sure to read the follow-up entry, "The Social Network", which I'm going to get right to work on and post ASAP.

Thanks for reading this entry all the way through, and I hope I'm proving to be a valuable resource to you. Please give me some feedback (Input! Need Input!) in the form of a Comment (below), and I'll see you in the Convoy on the road to prosperity.