For me, my goal is to reach financial independence ASAP and aim to retire by the age of 56 in 2041. I still have a while to go before retirement, but I'm hoping to quickly get to the point where my passive income can cover all my expenses so that I don't need to worry about supporting my family in case I get laid off (God forbid).
For purposes of my "Passive Income Coverage" posts, I will only consider my dividend income and rental income.
Below are my dividends and rental income for 2016:
- Dividends From Taxable Brokerage Account = $2,570.12
- Dividends From Roth IRA Account = $2,571.23
- Rental Income = $17,750.00
- Total Passive Income = $22,891.35
My total living expenses for 2016 is $41,949.16. This does not include money spent on charitable contributions, accelerated mortgage payments, and investing. 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.
So for 2016, my passive income covered 54.57% of my living expenses. Awesome! My passive income increased compared to 2015, and my living expenses decreased compared to 2015. I would say that I'm heading in the right direction. Based on this, I'm more than halfway to financial independence! Woohoo!! Hopefully with a mortgage now eliminated, my living expenses will be even lower in 2017 and my passive income will continue to grow. Although with a second child, the extra expense of another child may offset the savings of having no mortgage. We shall see.
I'm super pumped about what 2017 has yet to bring. Hopefully even more progress towards early financial independence!
How much of your investments or passive income covers your living expenses?