Traditional retirement planning focuses on accumulating assets, which eventually are converted into an income stream to last a lifetime. Creating retirement income without exhausting your portfolio presents a fundamental challenge.
This is especially problematic for early retirees for three reasons. First, your money may need to last much longer than traditional retirees’. Second, early retirees lack an income floor from social security and the ability to reasonably predict spending on insurance premiums provided by Medicare. Third, there is a large psychological shift from a high savings rate, required to accumulate assets that enable early retirement, to spending down your assets.
As I confronted these challenges, I began to look for alternative ideas to generate more retirement income. Two books expanded my thinking beyond using just stocks and bonds to support retirement spending.
Robert Kiyosaki’s “Cash Flow Quadrants” introduced me to the idea of using a small business as an investment to generate cash flow. He differentiates business owners, those that work on their business, from the self employed, those who work in their business.
Tim Ferriss’ “4-Hour Workweek” introduced the idea of creating a lifestyle business. He rejects the idea of retirement completely. Instead, he promotes building income streams that align with your desired lifestyle. This allows you to live well without delaying gratification.
The idea of creating a hobby business to supplement cash flow is appealing. But I found both books long on inspiration, but short on practical advice.
So I was excited to have an opportunity to read and review Todd Tresidder’s new book “The Leverage Equation: How to Work Less, Make More, and Cut 30 Years Off Your Retirement Plan.” Continue reading to learn if this book can help you create new income streams without creating a job.
