Wednesday, February 8, 2012
what's the difference between Financial Independence and Early Retirement?
I have seen some forum posts and articles among the early retirement community about the proper terminology to use, and what most accurately describes our goals and situations.
Here's how I see it:
Early Retirement: I consider retirement to be receiving most of your income from investments, and your current spending level is not dependent on any extra income other than your investments. This is not to say that you don't do anything to earn any extra money, just that you don't have to.
Financial Independence: You have enough in income from various sources that you no longer are enslaved by what would be called a day job, but you are predominantly living off income still, not savings. But that income may be adsense blog revenue, ebook sales, rental income, online videos, ebay sales, etc. So you are still living off income from 'work' but the sources are varied and are not typical jobs.
So while my long term goal is to be independent of all income sources other than that generated by savings, my current goal is to simultaneously develop alternate streams of income. And I'm well on my way. Keep reading to follow the journey.
- The Money Monk