True Financial Freedom for retirement?

* I realised I took very long to prepare this write-up due to my busy schedule :x *

Many a times, I see and hear people attempting to expound on their newly-read theories of financial freedom. The clichés of passive income, multiple streams of income, and all sorts of jargon that you can see and learn in any basic personal finance books all zoomed in the air towards you.

It strikes me as odd because if everyone in this world were to become disciplined and achieved their dreams of having a passive income exceeding their expenditure so as to be financially free, who in this world would still work? And if no one works, how will passive income still be generated?

To me, the 80/20 rule still applies. What most of the population knows (about passive income, etc) probably does work, but it is unlikely to bring us to the 20 of 80/20 any more. It's a wonder sometimes how some think that they have an advantage after reading just a few more personal finance books than others. The more I think, the more I believe that passive income generation is way overrated for the path towards financial freedom.

Again, another rule which I believe is that work is good for the soul. I believe the world is designed in such a way that work is necessary, else we will just waste away. Our souls and lives are like our muscles; if we don't do useful work with it, we will just waste away slowly since there's no need or use for us anymore.


So what constitutes true financial freedom in today's world?

To me, what makes one truly financially free is the ability to generate cash flow anytime without reliance. By reliance, I refer to relying on the government or your employer to survive.

What Wealth Journey mentioned in the following blog's comment is very true.
http://sgfinancialfreedom.blogspot.com/2010/09/my-thoughts-on-retirement.html#comments

"What knowledge, skills and expertise must I build up from now till I am 65 so that I will still be relevant to society then?"

The skills you need to acquire are those that will not regress with time. Example, project management skill but not IT programming skill. Sales talk and pitch that will be relevant in any industry that require sales. Accounting experience and skills that will be as relevant in 10years times and today. Medical knowledge for a GP will grow instead of shrink. Legal experience that will grow instead of shrink.

So you have to ask yourself, what is your vocation now? Do you see your skillset being relevant in 10 or 20years time? If not, which vocation are you going to transition to? Do you want to start learning the relevant skillset? Again , if the vocation you are transiting to has a perishable(regressing) skillset, then you shouldn't learnt it 'coz it's another 20years before you can used it.

Of importance to everyone is financial skill. It grows as the years passes and does not regress.

Of importance again is your ability to accumulate as much cash to invest (instead of spending on frivolous items) in your productive years (23-40yrs old). Your 20years of financial skill (when you have done most of the mistakes you could) will then be immediately relevant to you when you reach 40yrs old when there is no room for failure in your investing.

A little viewpoint of the engineering company I work at:
Staying too long at my current engineering job will only lead to me being obsolete when the technology matures. Experience and unique skills will count for nothing here when technology gets inevitably phased out. This was evident in 2008 during the retrenchment exercise. Sticking too long to a company exposes one to a growing risk which gets more and more substantial as you grow older and older. Having lots of savings is a good cushion, but it in no way guarantees you will be able to survive forever on that.


Hard technical skills can only bring one so far. If it never goes obsolete before you retire, good! But if your skills go obsolete when you are around 40 years old, good luck. Chances are, you are not needed anymore, and all your previous work experience will come to naught.


To me, Transferable Soft skills are the way to go
These transferable soft skills include the ability to sell and convey ideas, the ability to manage and organise, stress and time management, ability to analyse, ability to invest, and abilities like being multi-lingual. These are skills that are transferable from industries to industries, and does not regress with time at all.

What I am doing in the tuition industry, or in attempting to write a book, is in a way, attempting to secure, to learn, to build upon an income source that I can continue on even if I'm retrenched. I'm building my ability to generate income without relying on external employment. I'm building a skill on something which I can carry through for the next 20 to 40 years. Teaching is in a way selling and conveying ideas and concepts to the students. So is authoring.

And the above is only my initial plans. Further plans will include learning how to start, run and operate a business, how to sell products, etc. All these are invaluable soft skills which will carry one through life. Haven't we seen many successful people giving seminars and writing books at a ripe old age? Running a business at a ripe old age? These are financially free people who still have the ability to generate income at old age. It's whether they choose to do it.

How to go about achieving all these in order to be financially free? It's something challenging, mentally stimulating and exciting to me. Hopefully I can be up to the challenge I set myself on.