Linear Income or Residual Income?

We all know about linear income even if we don't recognize the name. It is income one receives for the hours put in on a job. Work for X time frame and earn Y. Most of Americans earn linear income from the day they begin in the workplace to the day they retire, then the money train stops. But what about after retiring? Well, hopefully while earning a linear income the worker saved enough through 401k or pension plans to supplement Social Security enabling them live a comfortable lifestyle in their golden years.

Residual income on the other hand, is a source of income that keeps coming in; from work done once. Several fields provide the opportunity for residual income; acting, insurance and network marketing come to mind. Actors are paid a fee for appearing in movies or TV. They also earn “residuals”. Movie actors receive residual payments when movies appear on TV or DVD. Television actors, residual payments start when the show goes to reruns or to DVD. Insurance agents are generally paid a commission on the new insurance policies they sell. An agent also receives renewal commission each time a client renews their policy. A Network marketer builds a team as well as a customer base. They earn income on purchases made by their customer base as well as sales earned by their team. Along with the opportunity to make a comfortable living while “working” people working in residual earning fields continue to generate income on work product produced once. The retirement puzzle for residual income earners adds an additional source of money for the retirement pot.

I’ve done the linear income model for years. I think it’s time to try the residual income model. Work once, get paid multiple times, this is my new goal.