In part two of this Multiple Talents, Multiple Income Streams series, The Wealthy Architect will lay out the next set of reasons why having additional streams of income is crucial for architects.
In case you missed it, here is Part 1
Tax Benefits – Whether a fan of the Trump administration or not, under that administration the Tax Cuts and Jobs Act was passed. Under this tax change, those who receive income from self-employment is allowed to be taxed by the IRS as a pass-through entity. This tweak to taxation creates a 20% reduction in the amount of taxes that small businesses pay to the IRS.
Pensions rarely exist any longer – While your parents or grandparents may have had jobs where they could put in their 20 years or so of works and have that company take care of them until their death, you’re unlikely to find this benefit. You need to plan for your own retirement and make sure you are making wise choices.
If you’re in the millennial age bracket, it is an increasing challenge when saddled with student loan debt to save for retirement. But no matter the age range where you find yourself, you have to rely on yourself for your retirement savings. Having multiple streams of income is even more important when you’re the architect of your retirement future. These additional income sources can allow you to retire at a faster pace rather than letting your 401 (k) dictate when retirement can occur.
Social Security – Social security may exist in some form by the time you retire, but it’s usually sage advice to perform your retirement planning as if social security will not exist. Further, there are analysts who are predicting that Social Security may be bankrupt as soon as 2035.
Wealth Creation for the long term – When you are a busy architect, planning for the following week can be overwhelming, much less for thirty years into the future. Furthermore, planning for something you can’t see or touch makes the goal of retirement planning even more challenging. The good news is that working on your side hustle now can pay great dividends in the future and won’t likely be subject to capital gains.
Starting your business during your downtime from work or after hours can become a great income generator. There’s the potential that your side hustle can make enough money to replace your main hustle. As per following the aforementioned conventional wisdom, make sure you aren’t leaving your main job before your side gig takes off. There will be plenty of articles listed here about the things to consider when starting a business as your sole income generator.
Is starting a business a great deal of work that often yields little reward in the short/immediate term? Absolutely. When you know that the “average” millionaire has seven income streams or more, there are lessons to be learned by prospective millionaires about creating wealth in the long term.
Make sure to follow The Wealthy Architect for more tips on how to build your financial house and become a wealthy Archipreneur.
