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Last year I earned $16.68 an hour – sort of. That’s more than the minimum wage in all but the District of Columbia and for California fast food workers who earn $20 and hour. Fast food workers are mostly part-time, I on the other hand are no time.
That hourly rate is my dividends and interest converted to a equivalent full-time employment. 🤑 I suspect capital gains would boost that a bit- or maybe not this year.
Given I don’t do a thing to earn that income, it is truly passive and a pretty neat system if you think about – and nearly everyone can do it-create passive income that is.
Have I stumbled on a new retirement planning concept? A new income replacement theory? What is a good passive hourly income rate relative to working hourly income rate? Can Monte (or even a spreadsheet) handle such a complex concept? 🤑
The only thing is, how do you, in advance, determine the passive income that will be generated from your aggregate investments? I guess if you dump cash in bonds, you know the interest to be paid. If you buy stocks for dividends you know that rate.
By George! There it is, and capital gains are icing on the cake – just like OT or a bonus. 😃
Oh wait, ✋we still need your income replacement needs, how much of your working hourly rate do you need in retirement? Please don’t ask me.
However, at the next meeting with your financial advisor just say you want to earn 50% more per hour than a McDonalds employee in California. Or maybe 75% or 100%. $30.00 an hour gets you $62,400 a year. 😱
Careful, the minimum wage goes up most years.
Is the $16.68 for both you and your wife together?
Yes, it’s the total based on all our interest and dividends, but is not our total income, Rather a small percentage.
Why would only dividend and interest be in the calculation?
I look at the equation that all of our income from pensions and SS are passive income because though we did, we are not doing anything for these.
$90,000 ÷ 4180 = $21.63 per hour
None of our retirement accounts dividends or savings accounts are included
I am not sure I am getting the context of this post? I meet a group of folks on Sunday mornings at our local McDonalds for coffee. The manager of the store at this time is an older man who tries to make the store a pleasant place. He came to Mc Donald’s after his working career and the atmosphere of the store is great. He is very good with the teenage workers. The young man at the register who I order my senior coffee from is very kind. I think the manager is doing a great job educating and mentoring our young people. This comment also goes along with Laura’s post about going back to work. Chris
This looks like another attempt by RDQ to brag, given that he then tells us dividends and interest are only a small part of his income. The concept doesn’t seem to useful in any real way other than to identify the great divide between the working poor and the asset rich retired “wealthy”.
I guess it’s more useful when trying to estimate a required level of retirement “income” and think about strategies to deliver that.
It was intended to be humorous. Hence all the emojis.
But for people who must live on investments, it is an interesting concept.
And you well know, we live on a pension and SS which I have said many times.
However, as I have also mentioned, that interest income is mostly the result of starting SS at FRA while still working and investing and reinvesting both our benefits for several years. That started in 2008. Interest is still reinvested.
This strategy which is contrarian as usual, has resulted in a couple of hundred thousand dollars in investments and if necessary, additional – mostly tax free income – each month which currently exceeds my wife’s net SS benefit.
Is that worth bragging about? I hope not. But it may be worth thinking about.
This post points out one of the issues of recent times, which may not be unusual. Many Americans who have assets are participating in the recent stock market booms and the favorable interest rates. But many others have been left behind. Gains and the boom in stocks over the decade prior to my full retirement allowed me to draw on SS, work part time gradually phasing that out and continue to invest in my retirement fund. More recently the favorable interest rates have contributed. If I include SS income, G’s pension and passive investment income (gains, dividends, interest) then our income in recent years has matched or exceeded our annual working income. This has expanded my finances to the point that our dividend and other “passive” income contributes about 40% of our annual withdrawal and we don’t spend all of that income each year. In 2024 we changed our wills to expand the charities list because it seems there will be significant assets when the oldest of us passes.
I haven’t actually calculated my total dividends for this past year, but last I looked I’m netting around $1500 a month, so like $18k per year. Hourly that’s what, like $9/hr? I’m still flirting with federal minimum wage level at this point 😅
$8,65 actually. You divide by 2080 hours in a work year. 🤣 onward and upward.
I’ve got a spreadsheet the estimates my cost of living per day, and it includes huge allowances for vacations, home improvement, and just about anything else I can envision. If you have that, you can divide by the 40 hours a week to get to the number. It’s a fun exercise.
If you pull out the references to min wage, how is it different than saying save enough to have ample income stream or portfolio size in retirement?