Most people either underestimate or overestimate the amount they will need for their financial freedom goals. You cannot depend on social security for financial freedom: You have to become your own financial advocate. Financial freedom is not about how much you make but how much you keep.
Let’s take a look at the definition of retirement and financial freedom.
Retirement: is the act of withdrawing from employment or work. Semi – retirement is reducing work hours. I do not belief in retirement as the day you stop working is the day you hasten your death. A much better term I like to use is financial freedom
Financial Freedom: is having enough money to live the lifestyle you want. When you are financially free you work because you want to not because you have to. There is a big difference in your attitude when you work because you want to versus working because you have to.
You will notice in all my literature I speak a lot on financial freedom rather than retirement. If you plan well now, you can pay less taxes, be debt free while meeting your living needs in your financially free years.
There are 2 main way to build financial freedom income:
- High net worth: High net worth means you have enough income from assets (less any liabilities) to maintain your lifestyle. Obviously what counts as enough income depends on the type of lifestyle you want. It would cost a lot less for a simple lifestyle than one who chooses to be adventurous. High net worth can be built with retirement savings, real estate or business.
- Residual income: you can build residual income by building a product or system that keeps earning income after the initial work is done. With residual income, you do not necessarily have a high net worth but you have enough income from your systems to maintain the lifestyle you enjoy. You could have both high net worth and residual income as both paths are not mutually exclusive. However, having residual income without building your net worth is only a short term fix to a long term problem. You can only be financially free for a short time with only residual income.
If you are interested in using residual income to build your financial freedom read my “Achieving Financial Freedom from your Lifestyle Business” series. This series will focus on building a high net worth with “retirement” savings.