Let’s have a quick talk about the meaning of life. Well, maybe not the whole nine yards, but do you have moments in your cubicle when you wonder if the way you’ve got your life planned is the smartest way to go at it. What are your plans for financial security, and where do you hope to be when you retire? And how soon do you want it to happen?

Here’s an unnerving thought: is it possible your plans for working and putting some money aside for your retirement are the worst way of going about it?

Writer Jack Parkerson thinks we’ve got it all wrong. In The Easy Way To Retire Early he says we’re taught that we can retire once we have a certain amount of money stashed away. We decide the amount of money we need by calculating how much we’d be able to withdraw each year until we die. If that number lines with how much we think we’d be able to live on, then that mean we’re probably safe to retire, he says.

Parkerson has his doubts about that. He thinks you can get it wrong, and that plugging away at saving is the long slow hard difficult way to do it.

So if you want to retire early, he says, you have just two options that will actually work for you: passive income and frugality.

Passive income vs frugality

Passive income is money earned without actively working for it (maybe a few hours a month will be needed for maintenance and so on). You might earn it from dividends, interest from share investments, or rental property. Then there are the more creative possibilities: write a book, create an app, sell a course, really, anything that you can create digitally once, and then sell. And the tried and true option: start or buy a business that can operate without you in it.

And then there’s frugality. When your monthly expenses are lower, he says, your passive income goals can be reached sooner. How much would your monthly expenses decrease if you didn’t have a car payment or you gave up that nice place you’re living?

This is actually an idea people are talking about more and more: minimalism; living on the bare necessities; cutting out excess in your life; stepping off the consumer treadmill. It’s not for everyone, but if you can do it, you’ll transform what happens to your money. And the less you’re spending, the more you have available to invest in creating passive streams of income.

How are you planning for your future? Is Jack right? Is passive income and frugality your only realistic option for retiring early? Join the discussion on our Facebook page.

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