Yesterday I was reading a great article over at The Monevator. I have to give this guy some credit, I mean I have read a few of his articles but this one was a real eye opener. This was a concept I had toyed with a bit but I never thought of it in the way it was written over there.
Essentially the article describes our societies obsession with the magic number of 1 Million Dollars and how everyone goes on about wanting to have a million dollars but in reality that is not the magic number that one has to acheive before retirement. The article states:
“What many of us are really looking for is a replacement for our salary. The number on your pay check is therefore the number you need to beat.“
The article goes on about how there are different kinds of income and that in order for a person to retire early, one must replace their active income from employment with a passive income of some kind that will require little to no maintenance so that one can retire, relax and continue to live the life (of course without the working part) that was maintained previously while employed.
The author discusses the different types of assets that produce passive income and gives a great example of how this plan could play out.
I do not want to detract from the article because it was fantastic and if there is anyone reading this that is shooting for that big 1 Million, that is ambitious but really unnecessary to retire early and still live well. br>