When you reach financial independence or retirement you may eventually experience a sense of emptiness. After years of hard work, aggressive saving, and smart investing, you might feel a letdown because the toughest financial challenges are behind you. Based on feedback from readers since 2009 and my own experience after leaving work in 2012, I’ve realized that having a purpose is essential for living a fulfilling life.
To find meaning after retirement or financial independence, staying active is key. While I’ve previously discussed balancing active and passive income in specific ratios, the true path to fulfillment might be even simpler:
Focus on generating active income to cover your discretionary wants while relying on passive income for your essential needs. This approach allows you to maintain purpose, continue safeguarding your financial future, and lead a more rewarding post-work life—a triple win!
Active Income for Wants, Passive Income for Needs
Life is a series of challenges. After overcoming one, you might find yourself wondering, “What’s next?”
For me, two pursuits have kept me focused since leaving my corporate job in 2012: writing on Financial Samurai and raising my children. These activities motivate me to stay healthy and build more passive income. Without them, I might have drifted into an unstructured life, perhaps going on a bender to Southeast Asia and never returning.
Despite the demands of parenthood, I’m constantly seeking new ways to stay engaged—especially now that both my children are in school full time. Sniff. Their absence during the day has created a 40+-hour-a-week void, which has led me to find more purpose after being a stay-at-home dad since 2017.
Identifying my wants and then making money to pay for them have been truly helpful in keeping busy. If you're feeling a void, I suggest you do the same. This is what I call “tethering.”
While it’s smart to use stock market returns to buy fun and practical items when times are good, spending “free money” doesn’t bring the same level of satisfaction that comes from achieving something through effort.
Here are some personal examples of wants that have motivated me to earn active income.
1) New Wardrobe
My athletic jackets are 4–5 years old, and it’s time for a replacement given I wear them daily. Instead of spending $120 on a new jacket, I initially spent $27 to fix the zipper. A year later, the zipper broke again, and the jacket became even more worn. What’s my solution?
Earn enough active income to fund a new one. While I don’t need a new jacket, I want one. To achieve this, I could teach private tennis lessons at $140 an hour at my local park. Along the way, I’ll meet new people and stay active. The more clothing items I desire, the more lessons I’ll give.
2) New Family Car
My current car is 10 years old on July 2025, but with only 59,000 miles. While it runs fine, I’m tempted by the technological and safety advancements in newer models. Safety first when it comes to driving around family. Replacing my 2015 Range Rover Sport with a 2025 model would cost approximately $120,000 out the door, a ridiculous sum of money.
To follow my 1/10th Rule for Car Buying, I’d need to earn $1.2 million in gross income, minus current passive income—a big gap of about $900,000. This challenge could push me to pursue additional consulting, expand Financial Samurai partnerships, or find a full-time job.
Alternatively, I could stick with maintaining my current vehicle for $1,000–$3,000 annually or rethink my car preferences entirely. My current car should easily be able to go for another five years. Meanwhile, a well-equipped, all-wheel-drive Honda CR-V for $35,000 seems like a solid choice. Earning $50,000 in active income to align with my 1/10th Rule is far more achievable than trying to cover a $900,000 gap as a retiree!
By requiring yourself to earn money to cover your wants, you naturally question whether those wants are truly worth it. Now that I think of it, I have no desire to spend potentially between 2,000 – 3,000 hours to try and buy a new luxury car I don't need. My time is way too valuable.
3) First-Class Roundtrip Tickets to Honolulu
At 47, I’ve embraced Economy Plus tickets for an added 30–50% premium over Economy, e.g., $750 versus $500. It's an upgrade that has taken me 22 years after graduating college to embrace.
However, First-Class tickets cost 3–4 times more than Economy, which seems like a waste since we all get to the same destination at the same time. Besides, First Class still serves rubber chicken meals and I'm not a heavy alcohol drinker.
If I decide to spend an extra $1,200 – $1,500 for first-class to Honolulu, I’ll fund it by generating active income. For instance, I might take on more one-on-one personal finance consulting sessions (average one a month) to cover discretionary wants like this. Helping individuals navigate their financial challenges is already fulfilling. Having this additional purpose for consulting might motivate me to meet demand and help more people.
Now I have to decide whether saving $750 for a five-hour flight by just sitting in Economy Plus, is easier than doing more consulting.
Leave Your Passive Income Alone To Cover Your Needs
Tying your financial wants to active income not only keeps you engaged but also reinforces discipline in distinguishing between needs and wants. By challenging yourself, you can enjoy life’s luxuries guilt-free post-FIRE while preserving a strong financial foundation.
Unlike an adult child whose parents provide everything, you'll feel a deep sense of pride and satisfaction knowing you earned your purchases—a feeling that’s priceless.
By generating active income to cover your wants, you allow your passive income to continue growing. Since risk assets like stocks and real estate tend to appreciate over time, reinvesting your passive income enables compounding, building even greater long-term financial stability. You can also use a portion of your excess investment gains to pay for some wants as well. But in general, you want to keep reinvesting your gains for more gains.
However, if you ever find your motivation dwindling or experience a lull in life, you might consider one final strategy for building wealth and purpose: self-sabotage.
Self-Sabotaging Can Provide Renewed Purpose In Retirement
Perhaps the greatest risk in retirement is the natural tendency to drift toward inactivity. Without self-discipline or a compelling reason to stay engaged, the default path often leads to complacency. Why else do you not have flat abs or a perpetually clean house?
This is why intentional self-sabotage can be an effective strategy to keep yourself motivated and active.
For example, in 2H 2023, I self-sabotaged by purchasing a home I didn’t need. This decision cut my passive income by $150,000 per year. For the first 3-6 months after purchase, my anxiety to provide went up given our finances were more vulnerable. However, knowing that my daughter would start school full-time the following September, I recognized I had an upcoming void to fill.
More Motivation And Purpose To Earn
Since then, the lack of liquidity has driven me to take on part-time consulting for four months, which re-opened my eyes to the early-stage startup world. The experience also gave me a renewed appreciation for the freedom I’ve enjoyed since leaving my job in 2012.
Self-sabotaging also motivated me to finish a new second book with Portfolio Penguin, slated for release in May 2025. Writing a book is hard because no one is whipping you to write. It requires immense self-discipline to translate creative thoughts into a logical and entertaining narrative. Then comes the painstaking process of going through dozens of editing rounds with multiple editors to refine and polish the manuscript.
Living paycheck-to-paycheck during those six months also led me to explore more business opportunities for Financial Samurai. These ventures introduced me to new people over drinks and dinners and helped me discover products I believe will benefit readers.
Setting a clear goal to “pay for” my house, a massive unnecessary want by December 31, 2027, has reenergized me. Without this self-sabotage, I might end up spending my days playing pickleball and doing little else.
Embrace Your Wants by Earning Active Income in Retirement
The Buddha once said, ‘Desire is the cause of all suffering.' In personal finance, wanting is often viewed as a negative. But by channeling your desires into purposeful actions, you can transform your retirement into something truly special.
Here’s to fulfilling our desires responsibly and finding purpose at every stage of our financial journey!
Readers, have you noticed a decline in discipline after retiring or achieving financial independence? Do you challenge yourself to earn actively for the things you want? What strategies do you use to ensure your investments continue growing, enabling more passive income and sustaining your financial freedom?
Generate More Passive Income Through Real Estate
In the past, generating passive income through real estate typically meant becoming a landlord, which can be a real pain. Today, you can easily generate true passive income by investing in REITs and private real estate funds. One option is Fundrise, which specializes in private real estate funds focused on residential and industrial commercial properties.
The outlook for real estate prices remains positive due to potentially declining interest rates, a persistent housing undersupply, favorable demographics, and a continued strong economy. With a minimum investment of just $10, Fundrise makes it accessible to diversify into private real estate.
Personally, I’ve invested over $300,000 with Fundrise to broaden my real estate portfolio and gain exposure to private AI companies. Fundrise is also a long-time sponsor of Financial Samurai.
Earn Active Income For Wants, Use Passive Income For Needs is a Financial Samurai original post. Financial Samurai began in 2009 and is a leading personal finance site today. Join 60,000 others actively building wealth and subscribe to my free weekly newsletter here.
Sam
Are you using just the tax definition for active and passive. Owners of working interest in energy production have a unique benefit never discussed here. If you own a working interest it generates monthly revenue and you pay expenses for operating, but the tax reform act of 1986 treats this income as active which allows losses from activities to be offset all other forms and income and is passed through on a K-1 for sub chapter S and LLC and taken at the personal level if done individually. How should one look at this type of monthly cash flow?
I’m using the effort definition. No effort = passive. Some effort = semi-passive.
Have you ever thought of a Subaru for your replacement family vehicle? We’ve primarily been a Toyota / Honda family, with a couple of Nissans (well, one was purchased back in the late 1970’s when the company was called Datsun), a Hyundai (the five door hatchback was an upgrade to the Datsun two door hatchback – so much easier to get kids into their car seats!), a couple of Chevys (a station wagon, a four door crew cab dually), a Mazda 5 (a “mini” mini-van after our spacious 2000 Honda Odyssey), and even a Ford (! Taurus). Recently we upgraded from our four door 2010 Nissan Versa sedan to a 2024 Subaru Outback. Naturally, I feel much safer driving the Outback with all it’s wonderful safety features than I did driving the Versa. However, I was surprised to discover I also feel safer driving the Outback than driving our 2017 Honda CR-V. The Outback’s adaptive cruise control is a great feature that makes freeway driving much easier than in our CR-V (although this might not be a fair comparison, since newer CR-Vs might also have this feature). If the Outback is too small for your family, Subaru’s largest model is the Ascent SUV. I don’t know why Subaru was never on our radar previously when it came time to purchase a new or used vehicle. Perhaps we thought it was too unaffordable for us at the time? But, with all the crazy drivers these days, safety has become a much more urgent priority. For us, our Subaru Outback certainly fits the bill.
Will check it out. One of my main issues is the convenience of the service station. But I guess it could be serviced at my nearby mechanic. I just love Toyotas and Hondas, and I think I’d like to get the new 4 Runner.
I think you make an interesting point about things. I think having both types is important just like you do!
Don’t forget the process of also minimizing expenses as well-and you can go green for cheaper than one might think. This can help alleviate the budget constraints that you might have and you can use those funds to build up those passive income streams!
I completely agree. I am only 5 months into my RE journey at age 47 but have noticed I am struggling to relax financially and open the purse strings for wants as my base nature (at least since having kids) is to save and invest all of my passive income. I am toying with the idea of picking up work 1 day a week to use that active income (that I don’t actually need) for guilt free spending solely on wants.
The fear of spending money is probably gonna be like that for the first one to two years of your retirement. It just feels so unnatural after decades of saving and investing aggressively while being frugal.
But getting that side, gig to earn supplemental retirement income does wonders for your psyche and for your ability to spend more and enjoy life. It’s worth taking up my idea to earn active income to pay for once. You’re gonna feel great if you do.
I like your logic. Building passive income is a continual goal of mine and something I try and improve on a little each year. I used to have the opposite approach of using active income for needs and passive for wants when I was younger. But age has slowed me down and increased my appreciation and desire for more passive and less active income and shifting toward a less stressful lifestyle.
Less stress is better for sure, especially when life gets super stressful in the middle ages with kids to raise and older parents to take care of.
Luckily, it’s been a market again since 2022, so the financial stress isn’t as great as what it could be in a bear market or dead market
I decided to use some of my 2024 crypto winnings on a hair transplant. Nobody will be able to take it away from me!
How’d it go? I’d be fascinated to learn more about the cost, procedure, recovery, and lasting power.
I’ve taken my head of hair for granted and it’s worth doing some research.
My rule is if the flight time is 4+ hours go first class assuming nonstop. Just worth it. That said, I have used the same trick you do. When I want something, I figure out how much work time I have to do to pay for it (both pre and post tax). Saved me a lot of spending. It is a trick I have tried to teach our kids with varying success. One is really good with money. The other, well, all I can say is good luck. If that kid gets any inheritance, spendthrift trust here we come.
I guess my cut off line is six hours, because it takes 5 1/2 hours to go one way to my favorite place on earth, Hawaii. And less than five hours back.
Sitting in economy class for one to three hours is easy peasy. I’m not willing to spend more than 50% over economy class for a ticket.
You should get into the miles game. Then u can fly business or first at less than the price of economy.
What is your suggestion on how to start since we don’t fly much at all? Any credit card suggestions? Thx
Unfortunately I cannot offer specific suggestions for you, as I am Singapore based rather than US based. However there are US based sites such as one mile at a time, that would be a starting point for US based credit cards and so forth.
To add, I am a bit of a miles-guy and in 2024 have received by various means a little over 500,000 miles. That has been enough for my wife and I do to all the travel we wanted this year in business, except for a recent return from Japan, where we could not get a business seat so flew premium economy. And we have not earned a single mile by flying!
Nice! Please share some insights into how you got 500,000 points by not flying. Thx
While this is Singapore centric, a lot of cards there can earn 4mpd or up to 6mpd from spending. Most of my free miles, which represent about half the 500k, are gained in this fashion. That is only about $60k/year of spending so not spending from someone who is super-rich – but of course everything I spend goes to the right credit card! Then there are the miles you (legally) buy. For example Citibank has something called Payall (if I am not wrong Citi US has it too). And a local Singapore bank has something called Pay Anything. These essentially allow a round-robin where there is a charge to ur card, that earns miles, with the other side being a credit to your bank account minus a fee. There is also the strategy of holding many cards and getting miles as part of the annual fee. But I tend to not use this as is more expensive. Per my s/sheet I “bought” 265k miles this year at an average price of $10.47/1000 miles. For many people they cant be bothered with the time it all takes. But I am retired, and the time I spend on this hobby is worth it every time we board a flight in business – which in 2024 was 8 times business, 1 first class and 1 premium economy. Since 2015 I have received just over 5million miles and used an average of abt 450k per year. My retirement hobby !