Retire sooner than expected with active & passive incomes

You likely think of traditional retirement as a permanent vacation where you’ll need lots of money to support the lifestyle you want to have for the remainder of your life. Traditional retirement requires you to calculate how long you think you’ll live, what kind of lifestyle you want to lead, and be able to support that while factoring in unknown hiccups that may pop up. You’re essentially guessing your future, so you’d have to be psychic; you may as well skip this and just buy a winning lottery ticket if that’s the case. But if you don’t know the answers to these questions and you’re looking to exit the rat race then I would highly suggest looking into how Tim Ferriss defines retirement and start maximizing your life enjoyment. This type of retirement can start in your 30s or 40s (or earlier, if you really have your shit together) but it does require one to adopt a life philosophy that goes against the grain. Because of this, it will likely appeal to most people who want to ‘go their own way’ but isn’t for everyone (especially those supporting more than just themselves).

The basis of this post centers around Tim Ferriss’ 4-hour Workweek book. The majority of the book, IMO, was full of obvious information, however, I walked away with a new mentality surrounding retirement and what retirement should mean to me. Keep in mind, that in an effort to make this as universal as possible, this post is for people of all ages and walks of life, so you’ll have to adjust these time-frames and ideas to suit you, your current lifestyle, and the lifestyle you want to lead.

There is obvious planning you should do such as saving money, utilizing employer-contributed retirement savings accounts, maximizing your savings with better interest rates/special accounts, then there’s less obvious tips… You can look into a passive income to supplement your active income and possibly, one day, exist solely on a passive income. (IMO, this is the end-goal as it most closely resembles what we think of as a traditional retirement.)

  • Active: A typical 9-5 or any job where you go and pursue an income would be an active income. Consider yourself lucky if this active income revolves around a passion. If you don’t at least somewhat enjoy it, consider changing it if you can, ask yourself to list good, valid reasons for not changing your active income.

  • Passive: A passive income is generated with minimal or absolutely zero effort, for example, income from investments like dividends from stocks, income generated from rental properties, or e-commerce distribution, like drop-ship scenarios. With Amazon as popular as it is, there are apps to assist the average Joe to become an Amazon reseller (where you would buy low, sell high; or act as distributor from one online source to Amazon consumers). These are just some very basic and let’s face it, crappy examples, I’m not recommending anything here, find what works for you and do your research before you dive in.

The sooner you start looking into either changing your active income (if you need to) or just maximizing it (with side jobs), the better. Also, don’t snub your nose at a side job simply because it wouldn’t add much, if you enjoy crafting something and can sell it on Etsy, then why wouldn’t you? Your end goal should be to implement a partial retirement sooner than you normally could a traditional retirement.

Not to get too philosophical in this post but you may as well enjoy your time on this planet and figure out what you want to do with this life. If you’re interested in exiting the rat race then you’ve likely adopted a lifestyle or at least a mentality surrounding a lifestyle that goes against the norm. Both partial or traditional retirement works best with minimal to zero debt. You’ll need to count up your assets versus your current debts and decide just how deep into this lifestyle you want to dive, just how passionate are you about getting out of the rat race and finding your own life path? Are you willing to give up that new BMW lease you’re making $700 monthly payments on to drive something you can purchase outright for $15k? What about giving up the short commute for a smaller house further out of the city where it’s cheaper. If you want to lead a self-fulfilled lifestyle that marches to a different drum then these are the kinds of decisions only you can make; everyone’s situation will be unique.

Good luck! I tried to write this from a high-level overview but if you want to dig in, then I encourage everyone to skim Tim Ferriss’ 4-Hour Workweek book and read the psychiatrist’s Dr. Scott Peck’s The Road Less Traveled to better understand what makes a human feel ‘fulfilled’ in life and how it may differ from the norm.

From another perspective but similarly (better?) worded summary:

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