Since interest income can easily change with changes in interest rate and the principal balance in a bank account, I will only consider for purposes of my "Passive Income Coverage" posts my passive income from dividends and rental income.
- Dividends From Taxable Brokerage Account = $2,330.97
- Dividends From Roth IRA Account = $2,105.16
- Rental Income = $17,400.00
- Total Passive Income = $21,836.13
My total living expenses for 2015 is $56,022.62. This does not including money spent on charitable contributions, accelerated mortgage payments, and investments in my taxable brokerage accounts and Roth IRA accounts. The reason I did not include these amounts into my living expenses is because they are not costs that are necessary in retirement. I do not have to make charitable contributions nor do I have to have money to invest with when I am in retirement. Do I enjoy investing? Absolutely. Do I want to continue investing in retirement? Sure, if I have the extra money. But is coming up with money to invest with necessary in retirement? Absolutely not. Besides, when I'm actually retired, I'll want to enjoy my life doing the things I enjoy and spending time with those I love. Frugality will not be as important to me at that point in time as it is to me right now. Of course, I'm not going to spend excessively; I'll still spend within my means, but I will not be concerned with saving aggressively.
So from a big picture standpoint, 38.98% of my living expenses is covered by my passive income. Sweet! Almost 40% of my living expenses can be covered by my passive streams of income. I can't wait until this mortgage is paid off. Once this mortgage is paid off, my living expenses will decrease even further, which will free up cash for me to invest in income producing assets that will hopefully increase my passive income even further.
I'm feeling pretty optimistic and excited about what the future will bring. Who knows, maybe I can even be financially independent before the age of 56. That would be awesome if that happened.