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Using Leverage to Create Retirement Income

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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.

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My Investment Portfolio: 2019

Stock certificates - 6

I can't predict the future, but 2018 was bad for the markets, and 2019 could be worse. If you're a seasoned investor, you've seen this before.  The Dow Jones Industrial Average was in positive territory much of the year, but ended with a blowout. … [Continue reading]

December 2018 Best of the Web

2018 is coming to an end and it's time for December's best articles from around the internet to help you save more, invest better and retire sooner. This month's articles share insight on investing in the face of recent market volatility. We … [Continue reading]

Finding the Right Financial Advisor

This blog is written for and by DIY investors and retirement planners. In the process of working on it, I've learned a lot of people need personalized financial advice and guidance. It would be failing a large percentage of our audience to … [Continue reading]

Does FIRE Make Life Harder?

I was an avid reader of financial independence, retire early (FIRE) blogs on the path to my own early retirement. They served as inspiration and education. However, I found them to be an echo chamber. Each tries to outdo the next in an effort to … [Continue reading]

My Favorite Books and Podcasts: 2018

Pen, notebook, earbuds, phone, microphone

When we need advice, most of us consult a friend. There is nothing like a personal referral from someone who has "been there/done that," and has your best interests at heart. So, traditionally, around this time of the year, I've written a … [Continue reading]

November 2018 Best of the Web

It's time for our monthly collection of articles to help you save more, invest smarter and retire sooner. We share several newsworthy events and announcements that occurred in November. The IRS announced increased contribution and income limits … [Continue reading]

Are Health Care Sharing Ministries A Viable Alternative To Health Insurance For Early Retirement?

Like many Americans planning early retirement, our family’s biggest challenge is obtaining affordable health insurance. We’re searching for an affordable, long-term solution to bridge the gap from employer provided coverage to Medicare. My recent … [Continue reading]

Navigating ACA Tax Credits to Purchase Affordable Health Insurance

A massive challenge for Americans planning to retire early is determining how we’ll obtain affordable health insurance. The earlier you want to retire, the more challenging it is to determine how much you need to bridge the gap until Medicare … [Continue reading]

Getting Higher Returns on Your Cash

dollars through hourglass

"Put your money to work," my grandmother would advise. Getting the highest possible return on your cash seems to be a mark of honor among frugal prospective retirees. But, with interest rates in the tank for most of a decade, if you haven't bothered, … [Continue reading]

October 2018 Best of the Web

October has been a crazy month in the world of finance. The stock markets have been volatile and trending downward. In the past week, the market gave up all of its gains for the year to that point. Many wonder if this could be the start of a bear … [Continue reading]

Pretirement: What Is It and Why Should You Care?

Pretirement is a term being proposed to describe a phase of life between career and retirement. Pretirement is a process that takes place over years, even decades, versus a single decision to retire. It is characterized by cutting back on work … [Continue reading]

Is The Three-Fund Portfolio Right For You?

Investing is simple. But it's not easy. Most people do best with a passive investing approach utilizing index funds. This minimizes unnecessary investing costs, taxes and common behavioral mistakes made when more active approaches to investing are … [Continue reading]

How Accurate Should Your Retirement Calculation Be?

caliper measurement

You run out of money. That's the fundamental event that most retirement calculators try to predict. If there's a strong probability that your money will last your lifetime -- congratulations -- you're financially independent! But, if not, then you … [Continue reading]

September 2018 Best of the Web

It's time for the best articles we've found around the internet in the last month to help you save more, invest smarter, and retire sooner. This month's articles explore how to generate income in retirement from your portfolio and Social … [Continue reading]

A Week In The Life of a FIRE Household

My journey to financial independence and retiring early (FIRE) started largely because I was burnt out on my career. This led to an oversimplified solution. If my career was the source of my unhappiness, I should pursue the opposite: … [Continue reading]

Using Real Estate to Retire Early

I connected with real estate investor, entrepreneur, writer, and educator Chad “Coach” Carson in 2015 when we were both getting into blogging about financial independence and retiring early (FIRE). We’ve developed a friendship around our similar … [Continue reading]

Investing in Land

Twin Meadows

Most financial experts will tell you that investing in land is a bad idea. And they're probably right. At best, on average, in many cases and places, land will only appreciate at the rate of inflation. And it won't produce any income while sitting … [Continue reading]

August 2018 Best of the Web

It's time for the best articles we've found around the internet in the last month to help you save more, invest smarter, and retire sooner. This month's selections explore the latest move in the price war to lower investment fees and what it means … [Continue reading]

Our Investment Plan: What We Do, What’s Changing, How We’ve Performed

A reader recently asked me to share my investment choices and portfolio breakdown. I'll do this by sharing our investment policy statement (IPS). This includes our asset allocation, strategies to control investment fees and taxes, and plans for … [Continue reading]

5 Lessons Learned In My Year As a Landlord

I've been intrigued by real estate for years. I first saw it as a way to accelerate my path to early retirement. More recently, I’ve considered the benefits of diversifying out of paper assets due to high stock valuations and low interest rates. … [Continue reading]