Many people have misconceptions relating to financial freedom in retirement. These misconceptions are primarily due to the abundance of financial advice online. The advice available online is often without context and does not paint a complete picture of the strategy or scenario.
It leads to people believing in the wrong concepts and strategies. What is the actual truth of the matter? You must create cash flow through passive income streams in your retirement if financial freedom is your ultimate goal.
What Is the Difference Between Financial Security, Independence, and Freedom?
You’ll be surprised to know that despite having millions of dollars in their account, many people do not feel as if they’re financially free or liberated. This mental state is apparent due to them speaking without confidence.
You might still be worried about market returns, future uncertainty, and supporting your income, creating some sense of insecurity. Financial independence is a middle ground between having security and allowing yourself to indulge in lifestyle requirements.
For example, company CEOs let their businesses function without them but still need to contribute their time and attention to maintaining their income sources. There’s nothing inherently wrong with working towards building your business and growing its operations. Still, you need to show up and take appropriate action.
True financial freedom means you do not have to show up, and your business or businesses generate passive income without you doing anything. Some examples of this include social security, pensions, royalties, etc.
How Passive Income Leads To Financial Freedom
You may have noticed that the internet has been putting forward the idea of setting up multiple passive income streams in recent years. Everyone has cash flow needs that can only be met through monthly income streams instead of relying solely on account balances and ROIs.
Since people are unaware of this, they set incorrect goals and never seem to reach true financial freedom. Your focus in retirement should be to build reliable income sources that meet your cash flow needs.
Setting up income streams is not simple and requires work and effort. Once you’ve successfully set it up, you will start receiving money every month without doing anything.
For example, setting up a sales funnel is one way of achieving this, especially if you have automated and optimized all steps of the funnel. On the other hand, people focus on the wrong approach, such as endlessly trying to accumulate assets.
Other examples of cash flow are rental properties. However, these are not without effort and do not fall into the category of true financial freedom. You are still required to spend money on upkeep, repairs, and difficult tenants.
People are beginning to realize that they can achieve true financial freedom by setting up passive income streams that do not require constant time and attention (after a certain point). Once you’ve identified this pathway for long-term success and freedom, you can begin looking at the right avenues that produce these desired outcomes that support your lifestyle requirements and financial independence.