Retirement planning – options for multiple streams of income

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In 2008, I read Robert G. Allen’s book, Multiple Streams of Income, and was introduced to the concept of creating other income streams. For most people their one and only income stream is their full Multiple Streamstime job. If they lose their job then they lose 100% of the income streams. However, if you have three or four types of income sources (streams) then you aren’t solely dependent on one major income source. In wake of the 2008 financial crisis its become even more important to not be solely dependent on one, but have multiple income streams. Here are some examples of income streams (residual income generating assets):

Working years income streams (20’s – 60’s)

  • Part time work (i.e. repairman, painter, lawn mower, specialized services)
  • Annuity
  • Tax liens
  • Reselling items – craigslist, ebay, or local classified ads
  • Laddered bonds
  • Taxable account (stocks/bonds) – paying dividends

Retirement years income streams (50’s – end of life)

  • Pension
  • Social Security
  • Roth IRA/401k/IRA/403b
  • Annuity
  • Laddered bonds

These are just a few ideas of assets that you can invest into and generate “streams of income” for specific time periods in your life. The key is to become less dependent on your primary income and more dependent on residual income assets (a.k.a: income streams). To further demonstrate my example here are three people that have separate financial perspectives. Person A is your typical slave to debt and expenses. Basically someone that is living paycheck to paycheck and saving zero. Person B is your normal everyday worker who has your normal amount of debt (30%), and is plotting along saving 10% of his income. Then there is person C who is completely focused on creating multiple streams of income. 100% of his income goes to assets that generate him monthly income. Those assets then pay 100% of his expenses and allows him to put a percentage away to retirement accounts. The key is he is no longer a slave to money, but his money is working for him.

Person A – Slave to Debt/Expenses

Person B – Typical employee saving 10%

Person C – 100% of income goes to assets generating residual income

I know this is a new concept for many people, but more people need to consider non-traditional way of generating residual income. This concept will create a “margin of safety” (to coin a phrase from Chris Farrell’s book – The New Frugality), and help your family weather unforeseen financial storms.

What means of multiple streams of income do you currently do? Is this a new concept to you? What are your thoughts or suggestions?

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  1. Pingback: The economy is going to get worse | Three Thrifty Guys

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