Residual Income vs Traditional Income, and the Viability of Retirement

by WorkFromHome on October 3, 2011

There was once a time in the American employment market when a worker could count on a sound retirement no matter where or how long they had worked. The country’s Social Security Insurance system was setup to allow senior citizens to enjoy their golden years, and funds from that program were supplemented by generous employee pensions that provided for a comfortable and enjoyable life after leaving the workforce for good.

Those days have ended for most of the country’s workforce. What remains is a system that encourages private savings plans, income schemes, and investments, rather than the guarantee of a pension-based retirement. And when it comes to earning those savings, there are two distinct options for American workers to consider: traditional income that is earned via full-time or part-time employment, and residual or passive income that is earned from sources like self-published works or e-commerce ventures made at home.

Each of these options has their merits, and it can often be hard to decide between them. Nevertheless, preparing for retirement is always a wise thing to consider and debate among your spouse, family, and friends.

Traditional Income and its Role in Retirement

The simple fact is that traditional income, also called linear income, has its limitations. Because linear income is earned only by actually showing up to work and putting in a full shift, it is extremely fickle and can be reduced simply by falling ill or having to take a day off for a dentist appointment — just to name a few things. And when a worker stops showing up to work, linear income stops showing up in their bank account.

For this reason, linear income is a fantastic way to earn a living when you’re young. It’s a great way to pay bills, and even contribute a portion of those earnings toward a savings plan or money market. It’s also the number one way to afford yourself the luxury of health care, dental care, and Social Security payments when retirement does arrive. But because its potential is inherently finite, it will leave many senior citizens high and dry after age 65.

Instead of adhering only to linear income and a limited 401(k) plan for retirement, it’s wise to pursue residual income for a truly limitless and ongoing revenue stream that can boost savings and retirement accounts. If used properly, residual income can even help America’s workforce retire a few years early and take an unexpected vacation from jobs that are increasingly affording less time off.

Residual Income and Possibilities or Retirement Savings

Residual income is earned by doing work just one time and enjoying the profits and royalties paid by that work over a far longer period of time — essentially, it is an indefinite source of income for those who pursue it properly and with the right amount of motivation. This makes sense for retirement accounts in a large number of ways.

First and foremost, it means that someone can take a day off of work, or quit their job, without sacrificing a regular contribution to their retirement savings or investment account. And it means that a day away from the office doesn’t result in a direct hit on the next paycheck. Further, it ensures that workers won’t have to get a second job, often part-time, in order to ensure that they can retire at some point.

And because residual income requires just a one-time investment, it won’t demand long after-work hours of maintenance, promotion, and repair. Simply dedicate one day to it — and do your work well — and residual income can prove to be truly invaluable and limitless.

Retirement savings needs to be ongoing, automatic, and almost thoughtless. It shouldn’t cause stress or worry; and with residual income, you can ensure that regular contributions — even of small amounts of money — are made directly to your retirement savings account, or your bank account, where they can be put to good use for the long-term.

Not “Get Rich Quick” But “Get Rich Slowly”

Residual income, no matter what some misleading advertisements might say, is not a “get rich quick” scheme. It will provide for an excellent savings and earnings mechanism, but it won’t happen overnight. Residual earnings often start slowly and build over time, as your product or work begins to increase in popularity and desirability.

That’s why it’s important to start the process of residual earning as soon as possible. Your age — and retirement — won’t wait for you to waffle on the issue. Carefully consider and choose a residual income source and put it to work for you now, so that there is far less stress and anxiety over the matter later.

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