Wednesday, March 23, 2016

Your Retirement Is A Bathtub

A little over a year ago, my wife and I decided to remodel our master bathroom. One of the things my wife wanted was a bigger bathtub. She’s rather tall and she couldn’t lay in the old tub without having to bend her legs and have her knees sticking out of the water. (Yeah, First World problem, I know.) We did some research and found a standalone tub that was big enough to allow her to stretch out her legs and remain submerged. The tub holds 65 gallons of water and our water heater only holds 50 gallons. This meant every time she would take a bath, she would be draining the hot water tank, leaving the rest of the house without hot water for at least an hour while the tank recharged. Not only that, but 50 gallons wouldn’t be enough to get a full tub to the temperature she likes. (She likes her bath like she likes her husband – hot!) This was obviously a problem.

The solution? As part of the remodel, we installed a tankless water heater to supply hot water to the new tub and our shower. As the name implies, a tankless water heater doesn’t store water in a tank and keep it hot. Rather, it heats the water as it passes through the unit. You never run out of hot water because the unit heats the water as it is needed. Additionally, you never have to worry about a tank rupturing or leaking or corroding. You save energy by only heating the water you need and not keeping 40 to 50 gallons of water heated 24 hours a day. Turns out, this is how the majority of the world heats water in homes. I’m not sure why it’s not more widely done in the U.S.

My tankless water heater

Your retirement is your bath tub

What does this have to do with finance? Think of your retirement as a bath tub and the hot water as your retirement savings. You want to spend your days soaking in nice warm water, but the water keeps cooling off. Expenses and inflation keep leaching off the heat and you need to keep hot water coming in to keep the bath warm. If your money isn’t generating income to cover your expenses, your hot water tank is going to run out of hot water and you’ll be left in the cold. But if you invest wisely in products that generate a steady income stream that covers your expenses, you’ve got yourself a nice little tankless water heater and you’ll never run out of hot water.

Where do you get your tankless water heater?

You need to build your own tankless water heater for your retirement. There are several ways to do this. Stocks that provide a reliable dividend are one way. Annuities are another. You can lend money and use the payments you receive as your income stream. You can create content that people pay for.  To put it in financial terms, passive income is your tankless water heater.

Don’t spend your retirement in cold water. Start installing your tankless water heater today by building up your passive income streams. (Water.. Streams.. See what I did there?)


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