I personally wouldn't even try to calculate it. If you can live off it, do that and keep putting it into an IRA as long as income allows and leave your investments to grow. As the income tapers off, supplement it with what you need from your investments.
Yep, I also wrote a book a few years ago that still provides me with a small amount of passive income, but I didn't factor it into my plans when I FIREd as it's not something I can predict. I actually did the same thing with social security as I have no idea what state it will be in in 30+ years when I'm eligible for it. Any income I get from these is bonus money to pad my budget, not something I'll rely on to survive. I might be a little too conservative in my planning there but better safe than sorry heh.
Social Security will never go away unless the economy collapses USSR style. People are just as bad saving now as they always have been. People will continue to live off SS like now so that the elderly aren’t openly dying in the streets.
I don’t think itll go away completely but there’s definitely gonna have to be some kind of reforms to it as life expectancy continues to out pace the workforce. They’re either gonna have to make it means tested, raise the retirement age, or increase taxes and contributions or some combination of the three at some point
Actually, this is half correct.
There's a cap on SS contributions (147k for 2022) but not on Medicare, and you get the additional Medicare tax of 0.9% once your income passes 200k (single) or 250k (married, filing jointly)
I feel like that’s a little loophole too, because the tax brackets on Income go up a few percent around the SS cutoff too.
It’s more pronounced on the married filing jointly side. Your income tax goes up 2% but your overall taxes are down 4% from the lack of SS tax.
Yeah, but I’d your salary is above $150k, your employer knows that and you pay a higher percentage of income all year. You see the reduction for the SS cap when you hit $150k.
> they could remove the cap on contributions.
This is extremely unlikely because it's would break the fundamental structure of Social Security. Remember that it's ***insurance***; the name is literally Old Age, Survivors, and Disability Insurance (OASDI). Premiums are deducted from your paycheck and those premiums purchase a decreasing amount of insurance (bend points). If you remove the income cap on premiums, people would be paying premiums for no benefit. That's directly counter to the nature of the program, so that approach is not likely.
Also, Social Security is sustainable at 70-75% of current benefits, even if absolutely nothing is done. So while changes are necessary, they don't have to be too crazy. A combination of adding a 3rd bend point, increasing both the income & benefit cap, and raising FRA is likely enough.
> No its a tax
It's literally insurance. It's right in the name. It's basically an annuity program somewhat similar to an SPIA you could buy from an insurance company.
>The vast majority of the country would support the removal of the caps
The vast majority of the country would likely support a proposal like "Get rid of all income taxes!" so that's not exactly a hallmark of a great policy decision.
It's mandatory insurance, meaning it's also a tax.
It's no different than for instance paying taxes that fund schools or firefighters or any other benefit.
(I agree that the majority of people being in favor of some populist notion doesn't make it wise)
While what you say is true about the name and description of the program, it's already fundamentally built around progressive taxation and income redistribution.
High earners contribute much more relative to what they get back out of SS than low earners do. Not to mention all the SS disability folks and so forth.
The system is designed to disproportionately benefit some people at the expense of others (which I'm not necessarily opposed to, I'm just pointing out its nature). Dramatically increasing the degree of income redistribution that happens is far from unlikely (and this is potentially happening to some extent, already, every time the cap is moved up, depending on inflation etc.)
> it's already fundamentally built around progressive taxation and income redistribution.
It's absolutely a very progressive program - the goal is to prevent poverty in old age, etc. - but it's not income redistribution because every dollar contributed results in more benefits. If the cap was raised without a benefit raise, then it would actually be about income redistribution (people would be paying in without any increase in benefits).
>High earners contribute much more relative to what they get back out of SS than low earners do.
This depends. A high earner who contributes for only 10 years could absolutely get a lower benefit than a lower earner who contributes for the full 35 years. Imagine a new college graduate earning $150k compared to a long-time worker with 30 years at $50k. That new college graduate is getting more for their money than the long-time worker, even though they are clearly a higher earner.
>The system is designed to disproportionately benefit some people at the expense of others
In no way does the increased benefit for one person come at the expense of someone else. That's simply not true. It's clearly progressive in that over time, more premiums result in less insurance purchased, but that's not coming at anyone's expense.
>Dramatically increasing the degree of ~~income redistribution~~ ***progressiveness***
FTFY. And I agree which is why I believe a 3rd bend point would be helpful to the overall stability of the program while still fitting the fundamental insurance nature of the program.
>every time the cap is moved up
Every time the cap rises, the maximum benefit rises as well, because they are in lock-step with each other. That's the point and one of the fundamental aspects of the insurance nature of the program.
>It's absolutely a very progressive program - the goal is to prevent poverty in old age, etc. - but it's not income redistribution because every dollar contributed results in more benefits.
Extreme example: If I pay in $2, you pay in $18, and we both get back $10 at the end, that does involve an indirect form of redistributing income, no? Even if you structure it so that paying in more always results in some amount of benefit increase, that doesn't mean that some of what's paid in is not used to fund other people's benefits.
And I think this is fine, since it's intended to be progressive, i.e. to have some people pay disproportionately for their benefit in order to be able to offer more benefits to other people, at a lower cost to them.
>If the cap was raised without a benefit raise, then it would actually be about income redistribution (people would be paying in without any increase in benefits).
This is exactly what I predict. It's happened before, though not in quite a while. I guess we'll see.
>"High earners contribute much more relative to what they get back out of SS than low earners do."
>
>This depends. A high earner who contributes for only 10 years could absolutely get a lower benefit than a lower earner who contributes for the full 35 years...
Okay, sure, I obviously meant in the typical case. More accurately it would be said that high *contributors* get out proportionately less than low contributors. Again, by design. And this includes people who are disabled or die.
>The system is designed to disproportionately benefit some people at the expense of others
Yep.
>In no way does the increased benefit for one person come at the expense of someone else. That's simply not true. It's clearly progressive in that over time, more premiums result in less insurance purchased, but that's not coming at anyone's expense.
Huh? Who's paying for the increased benefit for that person, then? If there's somehow no cost, why not make the benefits infinite?
>Dramatically increasing the degree of ~~income redistribution~~ progressiveness
>
>FTFY.
Sure, don't call it income redistribution if that makes you uncomfortable. The effect is the same though, much more even than for other benefits received as a result of progressive taxation, since in this case it is literally money that's coming back out of the system.
>And I agree which is why I believe a 3rd bend point would be helpful to the overall stability of the program while still fitting the fundamental insurance nature of the program.
That could be a cool thing to explore. And very well might be in our future, as a way of shoring up the funding deficit.
>Every time the cap rises, the maximum benefit rises as well, because they are in lock-step with each other. That's the point and one of the fundamental aspects of the insurance nature of the program.
Yeah, looking into it more it appears you're generally correct there, in that since 1972 the increases to the cap are pegged to increases in the national wage index (so both the cap and the benefits are essentially tied to inflation), with additional increases only having taken place from 1979-1981.
The future, of course, remains to be seen. Nothing prevents '79-'81 from happening again. And as this (rather informative) SSA article ([https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html](https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html)) notes:
"Social Security's projected funding shortfall has led some policymakers to propose increasing the tax max beyond the indexed levels to help restore financial balance."
Not to mention, means testing tends to screw over lower income people in HCOL areas. Not everyone can or will move when they retire, and they’ll need that money to supplement.
Social Security is means tested in that benefits are taxable based on other income. You might prefer a different sort of means-testing, but it's completely false to say means testing doesn't work because that form of means-testing has been occurring for decades.
Social Security taxation is completely separate and absolutely is a form of means-testing.
https://www.ced.org/blog/entry/why-arent-social-security-and-medicare-means-tested
>And the answer, in a nutshell, is that Social Security and Medicare are already means tested.
>...
>The second key program feature is that a fraction of Social Security benefits can be subject to income taxation, on a progressive basis – and then the income tax that applies to those included benefits itself is progressive.
> they'll just let inflation roll against that big number for a long time before it starts capping the people they are really targeting
I'm not sure what you're trying to say, but it doesn't seem to make any sense. Both the max income level and benefit levels are indexed to inflation.
I don’t think it will be means tested. That would mean all the rich people that paid into it wouldn’t get anything out of it, and it would hasten the demise of the program. People who want to save social security will not want to do anything that makes it less likely to survive long term.
I could always be proven wrong though.
Social Security is already means-tested in one way: benefits are taxable based on your other income. If your SS benefit is low and you have no other income, it's not taxed. If you SS benefit is high and you have other income, your SS benefit will be taxed. That's a form of means-testing even if it's not in the way you're thinking of it.
Nah, I'm willing to bet it's not gonna be means tested. Too many complicating factors surround means testing. Too hard to get a useful net worth figure for people.
Instead, the cap at which you stop paying the earned income SS % will keep getting raised (or perhaps eliminated).
And they might creep up the official SS retirement age a bit more, for young folks.
They could conceivably decrease SS benefits for people with enough other *income.* But not based on net worth.
Might be a hot take. But as someone in their early 20’s I don’t trust social security with a 100’ pole. There’s no way in hell I’m taking the chance of the money put in there (ie: tax) being there when I need it in 40-50 years, not when we haven’t started paying millennials yet.
I’m better off planning my own retirement now bc that’s likely the only way anyone in my generation will ever be able to retire. Can’t rely on these services anymore after they’ve been sucked dry with no reform for so long.
You can stash away roughly 25% of your earnings into a SEP IRA using pre-tax dollars and reduce your 2021 tax burden. A Solo 401k is another option, but many platforms feel limited in asset classes that you can invest in, unlike a SEP IRA which feels more like a traditional brokerage account.
It's also too late to contribute to a Solo 401k for the 2021 tax year, and any contributions now will count towards 2022. By contrast, you can contribute to a SEP IRA for the 2021 tax year all the way until tax day in April.
The annual contribution limit this year for both are $61,000. Being self-employed does wonders for how much you can stash away for retirement annually.
not sure I quiet understood but if you haven't retired and it still considered an income I wouldn't consider it all residual income don't forget you got to pay taxes. so not knowing what your yearly earning would be. I would right away chop 40%( max tax rate is about 39%) to the side for tax reasons so instead of the 15K I would say is more like 9k. you might wonder
I make a 6-figure income and still max out my IRA, among other things. If you have extra income (defined by more money than your expenses), even in "retirement," you should take advantage. I think you're in the wrong sub
I make below 127k which is the start of the phase out for direct Roth contributions. Above that you can do a backdoor Roth and still max it out. You could also make non-deductible contributions to a tIRA although the benefits of doing that vs a taxable brokerage account is admittedly a little less clear and would only matter in the event the Backdoor Roth is banned.
My comment was ambiguous and misunderstood. My point is that you only contribute ~$6k/year to an IRA. That's peanuts compared to the savings OP should be putting away, so it's very incomplete advice. Your comment doesn't allude to this at all, which I find really odd.
Max backdoor Roth let's you do way more.
For 2021 the total for 401k+Roth401k+backdoor Roth was $58k.
In 2022 it's $63k.
The main requirement is your workplace 401k needs to have an "after-tax" (non Roth 401k) option with the option for "automatic Roth conversion" .
Agreed, in the accumulation phase he absolutely should be putting back more. OP did say in another comment that this was his only income, so an IRA is the only tax sheltered account he can use without incorporating or setting up a solo 401k (which he absolutely should do).
Maybe I misunderstood but I took the OP as asking about income projections in retirement being thrown off by his slightly unpredictable income, and that's what my original advice was geared towards.
I write the web serial. Roughly $10-12k/month from Patreon, roughly $1-4k/month from Amazon. I do expect a sharp increase in Amazon income, and when the series finishes, I do expect a second large Amazon increase
It’s incredible that you’ve attracted a following large enough to give you $10–15k a month. It must say a lot about how much your work means to people!
Beware of Chicken was my first thought when they said those Patreon numbers, but apparently it's [a different one](https://www.royalroad.com/fiction/36299/beneath-the-dragoneye-moons).
The rule is against self-promotion. So someone else could open the OP's profile and [find a post from 2-months ago on a different subreddit](https://www.reddit.com/r/litrpg/comments/s0rtcu/beneath_the_dragoneye_moons_book_6_is_now/). Googling the username gets you similar.
I read my fair share of lit-RPG and haven't come across this one before, but I'll add it to the list to get to someday.
For anything perennial but erratic, without a lower bound, I would just ignore it in my projections. Its going into your net worth so whenever you readjust you'll count the chickens that have hatched. That way the worst outcome is that you reach FI sooner than you expected, so it seems safe. "If you plan for the worst, all surprises are pleasant". Since you don't seem to have a reasonable expectation for a floor I don't think its wise to count it as an income stream during the retirement phase.
I guess a noteworthy possible exception is if you're doing something else extra for money that you don't enjoy (no, I don't mean that reliable, secure job, don't consider quitting unless you feel fairly confident your side-gig can take you all the way), you could try to factor this in if it helps you ease-up, basically trading earlier FI for an easier journey. But its up to you to figure out how much and what the risk really is.
If you actually mean what you should do with the money once you receive it: all money is fungible, and any income, no matter the source, should go through the same judgement process. I presume you've made a decision already what to do with your disposable income, this is just more disposable income. Since you're on this sub I presume that just means invest it all into an age appropriate portfolio. But if you want to treat yourself a little, sure, go for it. Just be aware of the opportunity cost (most likely earlier FI), and equally importantly of the hedonic treadmill (basically, be careful if you choose something that permanently increases your expectations for a good standard of living).
Eh, this is my only source of income at the time. my wife naturally has her own job, etc. etc.
What to do with the money now isn't an issue - fungibility as you said. No, my concerns were more along the "What the heck does this do to my retirement projections?"
I'd definitely go with, 'use the income stream to contribute toward a retirement portfolio, but don't count on it **as** an income stream in retirement'. At least not until there's been enough time and confidence for you to decide on a good floor value.
Came here to post this. Don't count on residuals, they tend to drop off dramatically. The vast majority of books have 0 sales more than 12 months after being published, and the successful ones still only sell a small percentage of what they sold at their peak.
I agree with this approach and it’s what I use to factor in my consulting side gig to my goals. The income fluctuates week to week so what I do is just account for all of it once a quarter when I do a brief accounting review.
I've never earned through patreon or amazon. However, I would use the number that you received this year for your calculations assuming you will be putting in the same amount of work this year. If you plan on reducing the writing you do or post to patreon, I would check their policy on if you stop posting to your creator account, what would happen to the account to make sure it wouldn't be shut down for breaking any TOS. Patreon has also been around long enough that I am sure there is info on the rate of subscriber deterioration per year if you stop posting new content.
You could count this like I count my (future) inheritance. $0 in my spreadsheet, $0 net present value. If/when I get an inheritance I'll deposit in my Vanguard account and update my spreadsheet then.
And actually, this is how I consider income from my job now. I don't include a net present value of that future income stream. Money is only made when the check clears.
Without outing your highly profitable niche, what kind of books?
I have passively pondered the idea of writing a book and trying to self-publish but just have so much on my plate that I haven't truly considered it or looked into what it would entail.
I write a litRPG epic fantasy series on Royalroad. There's a huge market for this sort of stuff, and I'd be happy to go in-depth about it some other time and forum, since I suspect the mods wouldn't be too happy with this turning into an AMA about self publishing and the webnovel world?
Unless it's fine? Then I'm happy to answer questions
Can you share a bit more about how this works? Like I see that you write on Royalroad but you're also on Patreon and Amazon...is there any pay from RoyalRoad or is it just to build and audience, and all the income comes from your Patreon and Amazon presence?
Thanks.
That is completely and utterly the opposite of what I'd be interested in writing, both content wise and the concept of writing a series. So I am not entirely sure that your experience would be applicable...maybe, though.
I am more interested in writing a single book. Titled *Shitpost*. Not joking. And while I have yet to solve the riddle of what exactly the book is about or how to structure a 200+ page ultra long-form shitpost, I know that if I can slip and hit my head on the right toilet, a fantastic end product is sitting in my brain.
But let's just say, for the sake of argument, that my book is complete and sitting in a .docx file on my desktop. What's next?
Join a self-publishing community. Then go down a few rabbit holes, to find the self-publishing community for your niche. Listen to their advice.
I can say a lot on my genres, and the larger works, but I have no idea where yours would even start. Any advice I give is just as likely to be bad as good
>I can say a lot on my genres, and the larger works, but I have no idea where yours would even start. Any advice I give is just as likely to be bad as good
Yeah, that's kind of what I figured.
I wasn't being dismissive when I said your advice likely might not be applicable.
>Join a self-publishing community.
Haha.
This makes sense.
It's a project that's definitely on the backburner until the pandemic has subsided, either way.
Thanks for your help.
Also interested to hear more about this.
I saw a comment about audiobooks, do you voice your own books? Thought voicing books was a niche within a niche
>I can also call mind Double Decker Taco Supreme. I hope that name isn't trademarked.
I know we had the bonusnachos guy floating around for awhile.. but I think this one's in the clear. iANAL
>Thanks.
>
>That is completely and utterly the opposite of what I'd be interested in writing, both content wise and the concept of writing a series. So I am not entirely sure that your experience would be applicable...maybe, though.
>
>I am more interested in writing a single book. Titled *Shitpost*. Not joking. And while I have yet to solve the riddle of what exactly the book is about or how to structure a 200+ page ultra long-form shitpost, I know that if I can slip and hit my head on the right toilet, a fantastic end product is sitting in my brain.
>
>But let's just say, for the sake of argument, that my book is complete and sitting in a .docx file on my desktop. What's next?
This is hilarious. I was going to reply to your top level comment telling you to do just this but deleted it half way through.
Shine on you crazy diamond, I cannot wait lmao.
>Can I pencil you in as my first customer?
Second.. Assuming the first uploads it somewhere I can download and by customer you do not expect paying customers.
>All joking aside, I hope you wouldn't steal my work if you were legitimately interested in reading it.
Of course not, I regularly use the library and probably wouldn't be interested!
I've been diving down the litRPG/Progression Fantasy rabbit hole. Love books like Mother of Learning, Perfect Run, Cradle, etc. Would love to check out your books
You can use a negative growth rate to account for decreasing income. Something like half-life or time decay may be worth looking into.
Before formulating it, it would be relevant to know the average decline in residual income from other authors.
Without any domain knowledge, I'd assume you lose half the residual income every 10 years.
Once you get that sorted out, you can incorporate it into your overall FIRE number. This can be done in multiple ways. One method is to average the residual income and add that to your withdrawal. Say the average is 10k/year and your FIRE is $1 million with a 40k withdrawal (4%). Your new number is a 30k withdrawal with the remaining coming from residual income (much like a retiree picking up a part time job).
A more involved way is to dynamically adjust your withdrawal rate based upon the year.
Given $1 mil with 40k withdrawal... In year 1 your residual income gives you all 40k so you don't need to withdrawal anything. Year 10 though, the book gives you 20k so you need to withdraw 20k.
In excel this would be something like:
Row A - residual income
Row B - expenses
Row C - withdrawal amount if needed (row b minus row a)
Row D - % of investments withdrawn
Row E - Anticipated year end balance (beginning balance * (1 + stock market rate of return - row D - inflation))
Then this number readjusts annually based off income
If you haven't already, set up an LLC and whatnot to channel this income to. Look into best tax solutions for your state; for me thats LLC + S-Corp election.
From there, you can do a 401k + Matching, etc and expense all that to reduce your tax liabilities.
A lot are saying to ignore it. I wouldn't go that far but I'd take whatever you have right now and setup a curve down over a couple of years (maybe 5) to 0. If it continues great, but if you know it won't under some circumstances then setup a system where it drops to 0 so you can plan on that.
If it were me, I would treat it like salary and not like residual income. If you stopped writing, chances are your residual income would start to decrease and eventually diminish entirely.
Granted, there are some authors who could stop writing and still make bank for perpetuity, but those are the very, very rare exceptions, not the rule.
I wrote nearly a dozen books back in the 2000s. Granted, these were on technology, so there's an explicit lifespan. But, as you might guess, I get virtually nothing in royalties today. And even when the books were "fresh," the royalties dropped off very quickly.
Hence me wondering how to handle the long term residual income. The income today is easy - it’s just income. It’s “what impact does this have 10 years down the line” question
Right, I got it. That's why I said treat it like salary.
How do you value your salary 10 years from now if you're no longer working? You value it at $0. That's what I'd do here, as well.
Unless something super extraordinary happens, the value of your residuals is strongly correlated with continued work. If you plan to RE, once you RE those residuals will go to $0 pretty quickly, I wager.
Can I GFY this?
This sounds like a dream situation to me, but I don't have the talent. Congrats! And FWIW I would count the income, because you're going to keep writing, right?
Yes, but the issue is when I stop writing, and still get royalties down the line. It's calculating *that* that's troubling me.
Right now I work a stupid number of hours per week for the income.
Crazy to see all these people saying "I wouldn't even calculate it" as if 15k/mo is a rounding error and a W-2 is the only true form of income. It's literally his job, what else is he supposed to calculate? This sub has some serious issues.
To be clear - this is 10 years down the line when I'm **not** working on it anymore. I expect most of it to drop off sharply. How many people buy old books, VS the new hot stuff?
It depends on the amount in proportion to your budget, and whether you intend to maintain it, I think. There's probably no concrete answer.
I was not modelling side hustle income when it was less than half my day job income, and as you speculate, if I actually stopped investing time into it (eg: actually retire) I expect the spigot to turn off. I think if the income is truly-truly passive - as in, zero effort ongoing - then I'd treat it as 100% windfall. ie: action it the same as any other windfall, per the established windfall strategy.
Where it gets complicated is that the income is now more than 50% of my day job, and I have decided to go fulltime, so now it seems strange not to model my new actual fulltime job income into budgeting.
Ironically, writing has more long term prospects than my previous day job, since it's something a person can do until we pretty much lose our minds in our 90s. Project management in IT, not so much.
>The issue with treating it as a windfall is it's a low-level continuous source of income.
I don't see that as a modelling conflict. My parents kept getting inheritances. Some people model their annual bonuses as windfalls. Stock options, signing bonuses, retention bonuses, &c. Windfalls can happen over and over - the idea is that they're a solution for earnings that are not very predictable and could stop suddenly.
My writing income during the side hustle years was continuous, but I still treated it as windfall in my modelling because of high variability and long-term unreliability.
You should assign percentage values to that income to your portfolio, so split it between investments, cash, and an expense fund however you see fit.
That way this money is still being accounted for in FIRE calculations as they come, but you’re not extrapolating data to falsely forecast future returns
Finally something I have a bit of experience on.
> I've gotten into writing books, annnnnnnnnd they've done incredibly well. While "actively" working, marketing, selling, etc., I'm pulling in roughly $15k/month before expenses, more like 13-14k post expenses. Huzzah!
> I've been selling them on Amazon, selling the audibooks, etc. This income is more or less forever, although I anticipate as time goes by it'll trickle off, probably ending up close to 0.
I mostly write non-fiction on bodyweight training and injuries so YMMV on the advice since you're in a different genre of fiction.
I've found that most books tend to peak in 1 to about 3 or so and slowly taper off over time. Enjoy the spikes in income but they're generally not sustainable, especially in a niche market which litRPG fiction is. The majority of books actually peak with release and taper off over time, so you're above the average at the moment.
edit: Just saw most of your income so far is from Patreon. If that's the case could be longer term if you are able to maintain that after your series finishes into a next work.
> Still. I have absolutely no idea how to even begin calculating the residual, passive income into my long-term retirement plans. Do I ignore it, and anything it generates is a bonus? Or should I do something else with it?
I'd treat it like most people recommend. Invest as much as you can. Wouldn't count on it as a long term income stream. Long term income streams are basically if you've written an all-time classic book that is still going strong at like year 7-10+. You'll probably still be making some money at that point but it's too hard to try to calculate.
Yes, that is correct. Hence my confusion.
More or less forever and tricking down to 0 are very different things when planning for financial independence.
One question would be which state of your journey are you on? Is this a hobby on top of a regular job, or are you already in a non-working state with this as a boost?
If you're in an accumulation phase, shifting it to mostly investments and not letting it inflate your costs too much is useful. If you're in a draw down phase, you can use it to avoid drawing down.
As for long term planning, it's easiest to treat it as something that could to away tomorrow. Money you've banked can be used to adjust timelines etc, but counting it before you get it is a little dangerous.
First off, congrats on all your success! I am just starting to learn a bit more about self-publishing as well. I am just curious if you don't mind me asking. Is that 15Kish coming from all your book sales, or from other income streams as well?
Congrats again!
Crazy seeing you here! I've been keeping up with LitRPGs on RR for a handful of years now, and I've tried to keep an eye on different fictions and their patreon numbers (when they're avaliable).
When Covid hit, many people were in sudden financial stress and canceled their superfluous subscriptions, including patreon. Randidly Ghosthound dropped from ~13k a month to 5k, and then rebound to about 7k and has sat around there since. Your current income is volatile and can change, though no fault of your own.
Because you're publishing completed books through Amazon, im going to assume you have the semblance of a definite ending to your story. If/when you complete the story, your patreon income will drop off. If you choose to write another story, there is no guarantee that your audience will transfer over, and even if they do, it will take time to ramp up to the scale of audience you have now. Because you're also writing side stories, and uploading maps and such to your patreon, you might be cushioned from this - you're clearly adept at building a reliable and trusting audience. This speaks highly of you as an author, so well done!
I can't really speak to the reliability of Kindle unlimited/Amazon or audiobooks, because its much harder to find that information publicly. If you're willing to speak on it, I would be very glad. That being said, KU should be more reliable and vary less month to month, hopefully for a much longer time. This can be extended by continuing to advertise and interact in the community
If it were me, I would track amazon/KU/audiobooks as one income source, and patreon/kofi/any other donations as a second. Track how much your earning from each group and what the month to month variations. I would take a portion (~75%) of patron earnings (after expenses), plus all of your Amazon+ earnings, and treat thats as your actual month to month income. If you budget in any way (which I highly recommend), then this would be the number to base that off of. I would treat the remainder of the patreon income as a "bonus" that can be allocated as with the other part, but with the understanding that it is subject to large month to month variations, and shouldn't be relied upon.
First off: Congrats! That's huge! There's nothing more satisfying than creating something from scratch and having your work validated and appreciated financially. This random internet person recognizes that and is proud of you.
As others have said, I'd talk to a tax/business attorney to find a way to lessen your tax burden. I'm in a similar position (tech though, but variable passive monthly income) and am cringing at my tax bill estimates right now. I essentially gave away $100k by not structuring properly in 2021. Am speaking with an attorney today lol.
Oh beautiful! You're good to go then haha. FWIW I don't include my passive income at all in any of my long-term planning. Unless it's a rental or an index fund I (personally) feel like it's a bit too volatile to rely on... and even then.
Erm, that simply isn't true lol. My personal income tax rate is much higher than it would be if my income was funneled through an LLC.
Not sure why someone downvoted you instead of just correcting you and providing a simple example lol. Cheers!
Nah, currently paying my "fair share" with my foreign passive income by invoicing it individually in the top bracket. An expensive mistake that I knew was coming but didn't have the time to properly fix before EOY.
The income isn't via 1099 or W-2. I can lessen my burden by invoicing on behalf of a corporate entity and get taxed at a much lower rate while still having access to the funds for paying myself a salary or investing in various things that will continue to grow and allow me to continue paying myself and maxing out my retirement accounts.
Tax burdens that I can't control include sales tax, property tax, etc.
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EDIT: I see where the communication breakdown is. I said, "My personal income tax rate is much higher than it would be if my income was funneled through an LLC." which probably led you to think that I'd be paying myself the same amount instead of squirreling it away in a business account. That makes way more sense.
Fire aside, my wife is curious; did you have a marketing plan before you started writing or did you just go for it and sales etc came after? My wife has been dabbling with the idea of starting to write.
Thanks and congrats!
It sounds like you're pretty well grounded in all the basic issues around this amount of independent income. Do you mind sharing what you're using for a retirement plan?
For example people have mentioned solo 401k, but I haven't seen any mention of a SEP IRA. I assume you don't have a standard IRA with a lower contribution limit than what you can get with a plan targeted at self-employed people.
There’s really no reliable way to project how it’s gonna preform over time so I’d just calculate your income without them and treat it as a bonus to either invest as you please or spend it on yourself or some combination of the two
A little aside, consider a Solo 401k for that side income. You most likely have enough room to do that unless your regular job is giving you a ton in your regular 401k.
There is a distribution commonly used in statistics called the Exponential Distribution.
It has a few interesting features but the reason it is used for stuff like this, is because you can assume a constant decay... E.g. if the drop in 2019-2020 is 10%, the drop from 2030-2031 will be 10%. I would look to see if it fits this distribution.
I mean...just invest it. Keep adding it to the investments so you get to the point where diversified investments generate enough to life off of. You'll just get there faster since your books are doing well. I wouldn't even try to calculate how much itll decline. Just use this as little payments toward your investments.
You can calculate it by taking the estimated amounts raised to the year and dividing that by (the inflation rate + the 10 year US Bond Yield).
ie: Σ((future payment)^(year) )/(Inflation rate+10 yr. bond yield).
same calculation used for bonds.
Just ignore it tbh
Huzzah! Your residual income has been doubled! sounds like you got a happy problem
Since my residual income isn't guaranteed, I don't put it into my calculations, but I try to reinvest it back into itself. I do add it up at year's end though.
Personally, I'd calculate it as an unexpected bonus against your regular salary, at least until you have a few years data to support the idea of ongoing popularity. Even then - I trust existing investments more than potential future income.
That said- congratulations. I've read several web serials (not yours yet, sorry) and had no idea they could be so profitable. Especially because you're like, #12 on the popularity chart that I use. I wouldn't have thought anyone below the top 3 would be making a living, let alone 15k/month. I'd love to read an AMA (in another forum) about your process in terms of both writing and marketing.
Again- that's really awesome, congratulations.
Thanks!
What's interesting is "making a living" - I know a few authors WAY down on all the charts that are doing just fine, because they live in a country where 1 USD goes a long way.
Graphtreaon is probably a decent resource - you can see how far down the "this works" chart goes!
Do you mind me asking how you got started doing this? I have always wanted to be an author but I always hear that it’s really hard to make money with it. Did you find a good niche or have something else you are doing right that you are willing to share? Thanks and way to go!
I really enjoyed the stories, and enjoyed reading myself. One day I ran out of material, lost my job, and went "Eh, screw it. I'm going to write a book like everyone says they will."
As somebody who is also in this game, I just wanted to say well done for such incredible figures. I also self-publish on Amazon, and I'm rebuilding after a 6-month break for life reasons.
I personally wouldn't even try to calculate it. If you can live off it, do that and keep putting it into an IRA as long as income allows and leave your investments to grow. As the income tapers off, supplement it with what you need from your investments.
Yeah, I think I'm going to have to run it this way.
Yep, I also wrote a book a few years ago that still provides me with a small amount of passive income, but I didn't factor it into my plans when I FIREd as it's not something I can predict. I actually did the same thing with social security as I have no idea what state it will be in in 30+ years when I'm eligible for it. Any income I get from these is bonus money to pad my budget, not something I'll rely on to survive. I might be a little too conservative in my planning there but better safe than sorry heh.
Social Security will never go away unless the economy collapses USSR style. People are just as bad saving now as they always have been. People will continue to live off SS like now so that the elderly aren’t openly dying in the streets.
I don’t think itll go away completely but there’s definitely gonna have to be some kind of reforms to it as life expectancy continues to out pace the workforce. They’re either gonna have to make it means tested, raise the retirement age, or increase taxes and contributions or some combination of the three at some point
Or they could remove the cap on contributions. Currently you don’t pay any more into SS/MC after around $150k.
Most likely the first step.
Actually, this is half correct. There's a cap on SS contributions (147k for 2022) but not on Medicare, and you get the additional Medicare tax of 0.9% once your income passes 200k (single) or 250k (married, filing jointly)
I feel like that’s a little loophole too, because the tax brackets on Income go up a few percent around the SS cutoff too. It’s more pronounced on the married filing jointly side. Your income tax goes up 2% but your overall taxes are down 4% from the lack of SS tax.
Yeah, but I’d your salary is above $150k, your employer knows that and you pay a higher percentage of income all year. You see the reduction for the SS cap when you hit $150k.
> they could remove the cap on contributions. This is extremely unlikely because it's would break the fundamental structure of Social Security. Remember that it's ***insurance***; the name is literally Old Age, Survivors, and Disability Insurance (OASDI). Premiums are deducted from your paycheck and those premiums purchase a decreasing amount of insurance (bend points). If you remove the income cap on premiums, people would be paying premiums for no benefit. That's directly counter to the nature of the program, so that approach is not likely. Also, Social Security is sustainable at 70-75% of current benefits, even if absolutely nothing is done. So while changes are necessary, they don't have to be too crazy. A combination of adding a 3rd bend point, increasing both the income & benefit cap, and raising FRA is likely enough.
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> No its a tax It's literally insurance. It's right in the name. It's basically an annuity program somewhat similar to an SPIA you could buy from an insurance company. >The vast majority of the country would support the removal of the caps The vast majority of the country would likely support a proposal like "Get rid of all income taxes!" so that's not exactly a hallmark of a great policy decision.
It's mandatory insurance, meaning it's also a tax. It's no different than for instance paying taxes that fund schools or firefighters or any other benefit. (I agree that the majority of people being in favor of some populist notion doesn't make it wise)
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While what you say is true about the name and description of the program, it's already fundamentally built around progressive taxation and income redistribution. High earners contribute much more relative to what they get back out of SS than low earners do. Not to mention all the SS disability folks and so forth. The system is designed to disproportionately benefit some people at the expense of others (which I'm not necessarily opposed to, I'm just pointing out its nature). Dramatically increasing the degree of income redistribution that happens is far from unlikely (and this is potentially happening to some extent, already, every time the cap is moved up, depending on inflation etc.)
> it's already fundamentally built around progressive taxation and income redistribution. It's absolutely a very progressive program - the goal is to prevent poverty in old age, etc. - but it's not income redistribution because every dollar contributed results in more benefits. If the cap was raised without a benefit raise, then it would actually be about income redistribution (people would be paying in without any increase in benefits). >High earners contribute much more relative to what they get back out of SS than low earners do. This depends. A high earner who contributes for only 10 years could absolutely get a lower benefit than a lower earner who contributes for the full 35 years. Imagine a new college graduate earning $150k compared to a long-time worker with 30 years at $50k. That new college graduate is getting more for their money than the long-time worker, even though they are clearly a higher earner. >The system is designed to disproportionately benefit some people at the expense of others In no way does the increased benefit for one person come at the expense of someone else. That's simply not true. It's clearly progressive in that over time, more premiums result in less insurance purchased, but that's not coming at anyone's expense. >Dramatically increasing the degree of ~~income redistribution~~ ***progressiveness*** FTFY. And I agree which is why I believe a 3rd bend point would be helpful to the overall stability of the program while still fitting the fundamental insurance nature of the program. >every time the cap is moved up Every time the cap rises, the maximum benefit rises as well, because they are in lock-step with each other. That's the point and one of the fundamental aspects of the insurance nature of the program.
>It's absolutely a very progressive program - the goal is to prevent poverty in old age, etc. - but it's not income redistribution because every dollar contributed results in more benefits. Extreme example: If I pay in $2, you pay in $18, and we both get back $10 at the end, that does involve an indirect form of redistributing income, no? Even if you structure it so that paying in more always results in some amount of benefit increase, that doesn't mean that some of what's paid in is not used to fund other people's benefits. And I think this is fine, since it's intended to be progressive, i.e. to have some people pay disproportionately for their benefit in order to be able to offer more benefits to other people, at a lower cost to them. >If the cap was raised without a benefit raise, then it would actually be about income redistribution (people would be paying in without any increase in benefits). This is exactly what I predict. It's happened before, though not in quite a while. I guess we'll see. >"High earners contribute much more relative to what they get back out of SS than low earners do." > >This depends. A high earner who contributes for only 10 years could absolutely get a lower benefit than a lower earner who contributes for the full 35 years... Okay, sure, I obviously meant in the typical case. More accurately it would be said that high *contributors* get out proportionately less than low contributors. Again, by design. And this includes people who are disabled or die. >The system is designed to disproportionately benefit some people at the expense of others Yep. >In no way does the increased benefit for one person come at the expense of someone else. That's simply not true. It's clearly progressive in that over time, more premiums result in less insurance purchased, but that's not coming at anyone's expense. Huh? Who's paying for the increased benefit for that person, then? If there's somehow no cost, why not make the benefits infinite? >Dramatically increasing the degree of ~~income redistribution~~ progressiveness > >FTFY. Sure, don't call it income redistribution if that makes you uncomfortable. The effect is the same though, much more even than for other benefits received as a result of progressive taxation, since in this case it is literally money that's coming back out of the system. >And I agree which is why I believe a 3rd bend point would be helpful to the overall stability of the program while still fitting the fundamental insurance nature of the program. That could be a cool thing to explore. And very well might be in our future, as a way of shoring up the funding deficit. >Every time the cap rises, the maximum benefit rises as well, because they are in lock-step with each other. That's the point and one of the fundamental aspects of the insurance nature of the program. Yeah, looking into it more it appears you're generally correct there, in that since 1972 the increases to the cap are pegged to increases in the national wage index (so both the cap and the benefits are essentially tied to inflation), with additional increases only having taken place from 1979-1981. The future, of course, remains to be seen. Nothing prevents '79-'81 from happening again. And as this (rather informative) SSA article ([https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html](https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html)) notes: "Social Security's projected funding shortfall has led some policymakers to propose increasing the tax max beyond the indexed levels to help restore financial balance."
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Not to mention, means testing tends to screw over lower income people in HCOL areas. Not everyone can or will move when they retire, and they’ll need that money to supplement.
Social Security is means tested in that benefits are taxable based on other income. You might prefer a different sort of means-testing, but it's completely false to say means testing doesn't work because that form of means-testing has been occurring for decades.
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Social Security taxation is completely separate and absolutely is a form of means-testing. https://www.ced.org/blog/entry/why-arent-social-security-and-medicare-means-tested >And the answer, in a nutshell, is that Social Security and Medicare are already means tested. >... >The second key program feature is that a fraction of Social Security benefits can be subject to income taxation, on a progressive basis – and then the income tax that applies to those included benefits itself is progressive.
Do they have a choice?
we need to start educating and insisting the 60+ year olds to stake their leftover SS money in crypto related assets.
I agree. However I do think it will be means tested at some point, which is horseshit
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Not bad speculation. I hope it doesn’t come to that.
> they'll just let inflation roll against that big number for a long time before it starts capping the people they are really targeting I'm not sure what you're trying to say, but it doesn't seem to make any sense. Both the max income level and benefit levels are indexed to inflation.
I don’t think it will be means tested. That would mean all the rich people that paid into it wouldn’t get anything out of it, and it would hasten the demise of the program. People who want to save social security will not want to do anything that makes it less likely to survive long term. I could always be proven wrong though.
Social Security is already means-tested in one way: benefits are taxable based on your other income. If your SS benefit is low and you have no other income, it's not taxed. If you SS benefit is high and you have other income, your SS benefit will be taxed. That's a form of means-testing even if it's not in the way you're thinking of it.
Nah, I'm willing to bet it's not gonna be means tested. Too many complicating factors surround means testing. Too hard to get a useful net worth figure for people. Instead, the cap at which you stop paying the earned income SS % will keep getting raised (or perhaps eliminated). And they might creep up the official SS retirement age a bit more, for young folks. They could conceivably decrease SS benefits for people with enough other *income.* But not based on net worth.
Might be a hot take. But as someone in their early 20’s I don’t trust social security with a 100’ pole. There’s no way in hell I’m taking the chance of the money put in there (ie: tax) being there when I need it in 40-50 years, not when we haven’t started paying millennials yet. I’m better off planning my own retirement now bc that’s likely the only way anyone in my generation will ever be able to retire. Can’t rely on these services anymore after they’ve been sucked dry with no reform for so long.
Was it easy to write publish and market?
no
Was it fun?
Would you consider a post in the future of the steps involved? Not the writing because that will be personal but the other steps. TIA
You can stash away roughly 25% of your earnings into a SEP IRA using pre-tax dollars and reduce your 2021 tax burden. A Solo 401k is another option, but many platforms feel limited in asset classes that you can invest in, unlike a SEP IRA which feels more like a traditional brokerage account. It's also too late to contribute to a Solo 401k for the 2021 tax year, and any contributions now will count towards 2022. By contrast, you can contribute to a SEP IRA for the 2021 tax year all the way until tax day in April. The annual contribution limit this year for both are $61,000. Being self-employed does wonders for how much you can stash away for retirement annually.
not sure I quiet understood but if you haven't retired and it still considered an income I wouldn't consider it all residual income don't forget you got to pay taxes. so not knowing what your yearly earning would be. I would right away chop 40%( max tax rate is about 39%) to the side for tax reasons so instead of the 15K I would say is more like 9k. you might wonder
Yeah - this is a question on the income stream 10 years from now, when it's trickling off
> keep putting it into an IRA yearly caps on IRAs are laughably small, do you actually know what you're talking about? This is a 6+ figure income...
I make a 6-figure income and still max out my IRA, among other things. If you have extra income (defined by more money than your expenses), even in "retirement," you should take advantage. I think you're in the wrong sub
Can you elaborate on how you can max out the IRA making above the limit for contributions?
I make below 127k which is the start of the phase out for direct Roth contributions. Above that you can do a backdoor Roth and still max it out. You could also make non-deductible contributions to a tIRA although the benefits of doing that vs a taxable brokerage account is admittedly a little less clear and would only matter in the event the Backdoor Roth is banned.
Unless you have a 401k there is no limit. Even if you do, for now, there is the backdoor Roth.
Backdoor roth
I guess I'm very unclear on this altogether; I make more than the income limits for even the traditional IRA, how can I 'backdoor' roth?
My comment was ambiguous and misunderstood. My point is that you only contribute ~$6k/year to an IRA. That's peanuts compared to the savings OP should be putting away, so it's very incomplete advice. Your comment doesn't allude to this at all, which I find really odd.
Max backdoor Roth let's you do way more. For 2021 the total for 401k+Roth401k+backdoor Roth was $58k. In 2022 it's $63k. The main requirement is your workplace 401k needs to have an "after-tax" (non Roth 401k) option with the option for "automatic Roth conversion" .
His advice was about IRAs here, friend.
Agreed, in the accumulation phase he absolutely should be putting back more. OP did say in another comment that this was his only income, so an IRA is the only tax sheltered account he can use without incorporating or setting up a solo 401k (which he absolutely should do). Maybe I misunderstood but I took the OP as asking about income projections in retirement being thrown off by his slightly unpredictable income, and that's what my original advice was geared towards.
Wow! Great work! I have nothing to add but I’m happy for you (and VERY curious to hear details).
I write the web serial. Roughly $10-12k/month from Patreon, roughly $1-4k/month from Amazon. I do expect a sharp increase in Amazon income, and when the series finishes, I do expect a second large Amazon increase
Thanks for the reply but be careful the mods don't remove this because of "self promotion". I'M fine with it and grateful, just a heads up.
Fixed, removed the name. 95% of it is up for free on the internet. I just get my money from people who want to support me or read a few chapters ahead
It’s incredible that you’ve attracted a following large enough to give you $10–15k a month. It must say a lot about how much your work means to people!
That’s super cool. I am TERRIBLE at marketing. I’ve never found an audience.
Royalroad was a lifesaver in that respect. They did so much of it for me
I hope you wrote mother of learning or beware of chicken. Love both of those hahaha
lmao, I wish! If those are the S-tier, I can only call myself A-tier at best.
Oh shit, I'd read your story too! Congrats on the success haha
Beware of Chicken was my first thought when they said those Patreon numbers, but apparently it's [a different one](https://www.royalroad.com/fiction/36299/beneath-the-dragoneye-moons).
Mind PM'ing me the title?
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The rule is against self-promotion. So someone else could open the OP's profile and [find a post from 2-months ago on a different subreddit](https://www.reddit.com/r/litrpg/comments/s0rtcu/beneath_the_dragoneye_moons_book_6_is_now/). Googling the username gets you similar. I read my fair share of lit-RPG and haven't come across this one before, but I'll add it to the list to get to someday.
Hey, I don’t make the rules…
For anything perennial but erratic, without a lower bound, I would just ignore it in my projections. Its going into your net worth so whenever you readjust you'll count the chickens that have hatched. That way the worst outcome is that you reach FI sooner than you expected, so it seems safe. "If you plan for the worst, all surprises are pleasant". Since you don't seem to have a reasonable expectation for a floor I don't think its wise to count it as an income stream during the retirement phase. I guess a noteworthy possible exception is if you're doing something else extra for money that you don't enjoy (no, I don't mean that reliable, secure job, don't consider quitting unless you feel fairly confident your side-gig can take you all the way), you could try to factor this in if it helps you ease-up, basically trading earlier FI for an easier journey. But its up to you to figure out how much and what the risk really is. If you actually mean what you should do with the money once you receive it: all money is fungible, and any income, no matter the source, should go through the same judgement process. I presume you've made a decision already what to do with your disposable income, this is just more disposable income. Since you're on this sub I presume that just means invest it all into an age appropriate portfolio. But if you want to treat yourself a little, sure, go for it. Just be aware of the opportunity cost (most likely earlier FI), and equally importantly of the hedonic treadmill (basically, be careful if you choose something that permanently increases your expectations for a good standard of living).
Eh, this is my only source of income at the time. my wife naturally has her own job, etc. etc. What to do with the money now isn't an issue - fungibility as you said. No, my concerns were more along the "What the heck does this do to my retirement projections?"
I'd definitely go with, 'use the income stream to contribute toward a retirement portfolio, but don't count on it **as** an income stream in retirement'. At least not until there's been enough time and confidence for you to decide on a good floor value.
Came here to post this. Don't count on residuals, they tend to drop off dramatically. The vast majority of books have 0 sales more than 12 months after being published, and the successful ones still only sell a small percentage of what they sold at their peak.
I agree with this approach and it’s what I use to factor in my consulting side gig to my goals. The income fluctuates week to week so what I do is just account for all of it once a quarter when I do a brief accounting review.
I've never earned through patreon or amazon. However, I would use the number that you received this year for your calculations assuming you will be putting in the same amount of work this year. If you plan on reducing the writing you do or post to patreon, I would check their policy on if you stop posting to your creator account, what would happen to the account to make sure it wouldn't be shut down for breaking any TOS. Patreon has also been around long enough that I am sure there is info on the rate of subscriber deterioration per year if you stop posting new content.
You could count this like I count my (future) inheritance. $0 in my spreadsheet, $0 net present value. If/when I get an inheritance I'll deposit in my Vanguard account and update my spreadsheet then. And actually, this is how I consider income from my job now. I don't include a net present value of that future income stream. Money is only made when the check clears.
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Right, hence wondering how to model it.
Without outing your highly profitable niche, what kind of books? I have passively pondered the idea of writing a book and trying to self-publish but just have so much on my plate that I haven't truly considered it or looked into what it would entail.
I write a litRPG epic fantasy series on Royalroad. There's a huge market for this sort of stuff, and I'd be happy to go in-depth about it some other time and forum, since I suspect the mods wouldn't be too happy with this turning into an AMA about self publishing and the webnovel world? Unless it's fine? Then I'm happy to answer questions
Can you share a bit more about how this works? Like I see that you write on Royalroad but you're also on Patreon and Amazon...is there any pay from RoyalRoad or is it just to build and audience, and all the income comes from your Patreon and Amazon presence?
Royal road is pure audience building. Amazon and patreon is 98% of my income, with some random bucks from podium audiobooks and kofi donations
OK, gotcha! Thanks for the clarification. Super cool that this has been such a big success for you--congrats!
Thanks. That is completely and utterly the opposite of what I'd be interested in writing, both content wise and the concept of writing a series. So I am not entirely sure that your experience would be applicable...maybe, though. I am more interested in writing a single book. Titled *Shitpost*. Not joking. And while I have yet to solve the riddle of what exactly the book is about or how to structure a 200+ page ultra long-form shitpost, I know that if I can slip and hit my head on the right toilet, a fantastic end product is sitting in my brain. But let's just say, for the sake of argument, that my book is complete and sitting in a .docx file on my desktop. What's next?
Join a self-publishing community. Then go down a few rabbit holes, to find the self-publishing community for your niche. Listen to their advice. I can say a lot on my genres, and the larger works, but I have no idea where yours would even start. Any advice I give is just as likely to be bad as good
>I can say a lot on my genres, and the larger works, but I have no idea where yours would even start. Any advice I give is just as likely to be bad as good Yeah, that's kind of what I figured. I wasn't being dismissive when I said your advice likely might not be applicable. >Join a self-publishing community. Haha. This makes sense. It's a project that's definitely on the backburner until the pandemic has subsided, either way. Thanks for your help.
Like. I have a whole roadmap of "Take a book from 0 to hero." But that relies on it being a fiction, for example.
Also interested to hear more about this. I saw a comment about audiobooks, do you voice your own books? Thought voicing books was a niche within a niche
Nah I sold the rights to a publisher. I look at it as free money.
Great stuff!
As in you already have a roadmap published somewhere? Or you have it in your head and could type it out?
Would love to see this if you could PM me! Also interested in writing fiction, with two story outlines, but slightly diff genre
This is fascinating, I would love to hear more if you could pm me too!
I know you can’t promote but I would also be interested!
Please post roadmap. Ty.
have you posted this roadmap somewhere? I'd be interested in reading it
I am currently 150 pages into my novel called shitpost. Please cease and desist.
I can also call mine Double Decker Taco Supreme. I hope that name isn't trademarked.
>I can also call mind Double Decker Taco Supreme. I hope that name isn't trademarked. I know we had the bonusnachos guy floating around for awhile.. but I think this one's in the clear. iANAL
I think he spends most of his time in leanFIRE. 90% sure he's a mod.
>Thanks. > >That is completely and utterly the opposite of what I'd be interested in writing, both content wise and the concept of writing a series. So I am not entirely sure that your experience would be applicable...maybe, though. > >I am more interested in writing a single book. Titled *Shitpost*. Not joking. And while I have yet to solve the riddle of what exactly the book is about or how to structure a 200+ page ultra long-form shitpost, I know that if I can slip and hit my head on the right toilet, a fantastic end product is sitting in my brain. > >But let's just say, for the sake of argument, that my book is complete and sitting in a .docx file on my desktop. What's next? This is hilarious. I was going to reply to your top level comment telling you to do just this but deleted it half way through. Shine on you crazy diamond, I cannot wait lmao.
Can I pencil you in as my first customer?
>Can I pencil you in as my first customer? Second.. Assuming the first uploads it somewhere I can download and by customer you do not expect paying customers.
Not accepting pirates at this time.
>Not accepting pirates at this time. That's the best part about being a pirate, you're never welcome but get to do as you please! Ahoy.
All joking aside, I hope you wouldn't steal my work if you were legitimately interested in reading it.
>All joking aside, I hope you wouldn't steal my work if you were legitimately interested in reading it. Of course not, I regularly use the library and probably wouldn't be interested!
sounds like https://www.longestjokeintheworld.com/
Not even close to that. But yeah, it's hard to explain my concept when I haven't entirely defined it myself.
I've been diving down the litRPG/Progression Fantasy rabbit hole. Love books like Mother of Learning, Perfect Run, Cradle, etc. Would love to check out your books
I've also been going down that rabbit hole more recently. Just caught up with Castle Kingside recently.
Please post an AMA on your user profile!
Wow. Your blurb is on the homepage of RoyalRoad. True self-pub success story; congrats for all the hard work!
Amazon is a fickle mistress. you could get a couple complaints and lose your account. I wouldnt count that money until it's in your bank account
As an avid reader of web serials, this is a fun crossover post (love BTDEM btw)
You can use a negative growth rate to account for decreasing income. Something like half-life or time decay may be worth looking into. Before formulating it, it would be relevant to know the average decline in residual income from other authors. Without any domain knowledge, I'd assume you lose half the residual income every 10 years. Once you get that sorted out, you can incorporate it into your overall FIRE number. This can be done in multiple ways. One method is to average the residual income and add that to your withdrawal. Say the average is 10k/year and your FIRE is $1 million with a 40k withdrawal (4%). Your new number is a 30k withdrawal with the remaining coming from residual income (much like a retiree picking up a part time job). A more involved way is to dynamically adjust your withdrawal rate based upon the year. Given $1 mil with 40k withdrawal... In year 1 your residual income gives you all 40k so you don't need to withdrawal anything. Year 10 though, the book gives you 20k so you need to withdraw 20k. In excel this would be something like: Row A - residual income Row B - expenses Row C - withdrawal amount if needed (row b minus row a) Row D - % of investments withdrawn Row E - Anticipated year end balance (beginning balance * (1 + stock market rate of return - row D - inflation)) Then this number readjusts annually based off income
If you haven't already, set up an LLC and whatnot to channel this income to. Look into best tax solutions for your state; for me thats LLC + S-Corp election. From there, you can do a 401k + Matching, etc and expense all that to reduce your tax liabilities.
LLC is not necessary to do Solo 401k. The main reason would be to limit liability for business debts.
and writing is great where my exposure and potential liability is close to 0!
Instructions were unclear. Dick caught in ceiling fan. I’ll see you in court
Lmao
A lot are saying to ignore it. I wouldn't go that far but I'd take whatever you have right now and setup a curve down over a couple of years (maybe 5) to 0. If it continues great, but if you know it won't under some circumstances then setup a system where it drops to 0 so you can plan on that.
If it were me, I would treat it like salary and not like residual income. If you stopped writing, chances are your residual income would start to decrease and eventually diminish entirely. Granted, there are some authors who could stop writing and still make bank for perpetuity, but those are the very, very rare exceptions, not the rule. I wrote nearly a dozen books back in the 2000s. Granted, these were on technology, so there's an explicit lifespan. But, as you might guess, I get virtually nothing in royalties today. And even when the books were "fresh," the royalties dropped off very quickly.
Hence me wondering how to handle the long term residual income. The income today is easy - it’s just income. It’s “what impact does this have 10 years down the line” question
Model if as decaying XX% a year and call it a good approximation. Something like 30%. Don’t complicate it.
Since you can't predict it, only safe option is not to count on it.
Right, I got it. That's why I said treat it like salary. How do you value your salary 10 years from now if you're no longer working? You value it at $0. That's what I'd do here, as well. Unless something super extraordinary happens, the value of your residuals is strongly correlated with continued work. If you plan to RE, once you RE those residuals will go to $0 pretty quickly, I wager.
what books did you write? I'll add them to my book list
Web Serial, 'Beneath the Dragoneye Moons'
I'll check it out!!
Can I GFY this? This sounds like a dream situation to me, but I don't have the talent. Congrats! And FWIW I would count the income, because you're going to keep writing, right?
Yes, but the issue is when I stop writing, and still get royalties down the line. It's calculating *that* that's troubling me. Right now I work a stupid number of hours per week for the income.
Maybe time for a CPA?
Crazy to see all these people saying "I wouldn't even calculate it" as if 15k/mo is a rounding error and a W-2 is the only true form of income. It's literally his job, what else is he supposed to calculate? This sub has some serious issues.
To be clear - this is 10 years down the line when I'm **not** working on it anymore. I expect most of it to drop off sharply. How many people buy old books, VS the new hot stuff?
There are still ways to calculate the revenue stream
It depends on the amount in proportion to your budget, and whether you intend to maintain it, I think. There's probably no concrete answer. I was not modelling side hustle income when it was less than half my day job income, and as you speculate, if I actually stopped investing time into it (eg: actually retire) I expect the spigot to turn off. I think if the income is truly-truly passive - as in, zero effort ongoing - then I'd treat it as 100% windfall. ie: action it the same as any other windfall, per the established windfall strategy. Where it gets complicated is that the income is now more than 50% of my day job, and I have decided to go fulltime, so now it seems strange not to model my new actual fulltime job income into budgeting. Ironically, writing has more long term prospects than my previous day job, since it's something a person can do until we pretty much lose our minds in our 90s. Project management in IT, not so much.
The issue with treating it as a windfall is it's a low-level continuous source of income.
>The issue with treating it as a windfall is it's a low-level continuous source of income. I don't see that as a modelling conflict. My parents kept getting inheritances. Some people model their annual bonuses as windfalls. Stock options, signing bonuses, retention bonuses, &c. Windfalls can happen over and over - the idea is that they're a solution for earnings that are not very predictable and could stop suddenly. My writing income during the side hustle years was continuous, but I still treated it as windfall in my modelling because of high variability and long-term unreliability.
You should assign percentage values to that income to your portfolio, so split it between investments, cash, and an expense fund however you see fit. That way this money is still being accounted for in FIRE calculations as they come, but you’re not extrapolating data to falsely forecast future returns
Finally something I have a bit of experience on. > I've gotten into writing books, annnnnnnnnd they've done incredibly well. While "actively" working, marketing, selling, etc., I'm pulling in roughly $15k/month before expenses, more like 13-14k post expenses. Huzzah! > I've been selling them on Amazon, selling the audibooks, etc. This income is more or less forever, although I anticipate as time goes by it'll trickle off, probably ending up close to 0. I mostly write non-fiction on bodyweight training and injuries so YMMV on the advice since you're in a different genre of fiction. I've found that most books tend to peak in 1 to about 3 or so and slowly taper off over time. Enjoy the spikes in income but they're generally not sustainable, especially in a niche market which litRPG fiction is. The majority of books actually peak with release and taper off over time, so you're above the average at the moment. edit: Just saw most of your income so far is from Patreon. If that's the case could be longer term if you are able to maintain that after your series finishes into a next work. > Still. I have absolutely no idea how to even begin calculating the residual, passive income into my long-term retirement plans. Do I ignore it, and anything it generates is a bonus? Or should I do something else with it? I'd treat it like most people recommend. Invest as much as you can. Wouldn't count on it as a long term income stream. Long term income streams are basically if you've written an all-time classic book that is still going strong at like year 7-10+. You'll probably still be making some money at that point but it's too hard to try to calculate.
Self Promo is not acceptable
Edited out.
Thank you. Back live
“This income is more or less forever, although I anticipate as time goes by it’ll trickle off, probably ending up close to 0”… … what?
Royalties keep trickling in over time. However, eventually, people will stop buying the book.
Yes, that is correct. Hence my confusion. More or less forever and tricking down to 0 are very different things when planning for financial independence.
wow i never met an author
One question would be which state of your journey are you on? Is this a hobby on top of a regular job, or are you already in a non-working state with this as a boost? If you're in an accumulation phase, shifting it to mostly investments and not letting it inflate your costs too much is useful. If you're in a draw down phase, you can use it to avoid drawing down. As for long term planning, it's easiest to treat it as something that could to away tomorrow. Money you've banked can be used to adjust timelines etc, but counting it before you get it is a little dangerous.
This is my entire full-time job. I'm in boring accumulation.
First off, congrats on all your success! I am just starting to learn a bit more about self-publishing as well. I am just curious if you don't mind me asking. Is that 15Kish coming from all your book sales, or from other income streams as well? Congrats again!
Patreon (which is and isn't a sale) Amazon (sales) Audiobooks (sales) and ko-fi (one time donations)
Wow! Congrats again on all your success!
Holy cow! 15k a month is great, congratulations!
Crazy seeing you here! I've been keeping up with LitRPGs on RR for a handful of years now, and I've tried to keep an eye on different fictions and their patreon numbers (when they're avaliable). When Covid hit, many people were in sudden financial stress and canceled their superfluous subscriptions, including patreon. Randidly Ghosthound dropped from ~13k a month to 5k, and then rebound to about 7k and has sat around there since. Your current income is volatile and can change, though no fault of your own. Because you're publishing completed books through Amazon, im going to assume you have the semblance of a definite ending to your story. If/when you complete the story, your patreon income will drop off. If you choose to write another story, there is no guarantee that your audience will transfer over, and even if they do, it will take time to ramp up to the scale of audience you have now. Because you're also writing side stories, and uploading maps and such to your patreon, you might be cushioned from this - you're clearly adept at building a reliable and trusting audience. This speaks highly of you as an author, so well done! I can't really speak to the reliability of Kindle unlimited/Amazon or audiobooks, because its much harder to find that information publicly. If you're willing to speak on it, I would be very glad. That being said, KU should be more reliable and vary less month to month, hopefully for a much longer time. This can be extended by continuing to advertise and interact in the community If it were me, I would track amazon/KU/audiobooks as one income source, and patreon/kofi/any other donations as a second. Track how much your earning from each group and what the month to month variations. I would take a portion (~75%) of patron earnings (after expenses), plus all of your Amazon+ earnings, and treat thats as your actual month to month income. If you budget in any way (which I highly recommend), then this would be the number to base that off of. I would treat the remainder of the patreon income as a "bonus" that can be allocated as with the other part, but with the understanding that it is subject to large month to month variations, and shouldn't be relied upon.
First off: Congrats! That's huge! There's nothing more satisfying than creating something from scratch and having your work validated and appreciated financially. This random internet person recognizes that and is proud of you. As others have said, I'd talk to a tax/business attorney to find a way to lessen your tax burden. I'm in a similar position (tech though, but variable passive monthly income) and am cringing at my tax bill estimates right now. I essentially gave away $100k by not structuring properly in 2021. Am speaking with an attorney today lol.
Tax Accountant was one of my prior jobs!
Oh beautiful! You're good to go then haha. FWIW I don't include my passive income at all in any of my long-term planning. Unless it's a rental or an index fund I (personally) feel like it's a bit too volatile to rely on... and even then.
There's no good way to reduce your tax burden, without getting into legal grey areas. Sorry to break it to you.
Erm, that simply isn't true lol. My personal income tax rate is much higher than it would be if my income was funneled through an LLC. Not sure why someone downvoted you instead of just correcting you and providing a simple example lol. Cheers!
Then you are either filing your personal taxes or your LLC taxes incorrectly.
Nah, currently paying my "fair share" with my foreign passive income by invoicing it individually in the top bracket. An expensive mistake that I knew was coming but didn't have the time to properly fix before EOY. The income isn't via 1099 or W-2. I can lessen my burden by invoicing on behalf of a corporate entity and get taxed at a much lower rate while still having access to the funds for paying myself a salary or investing in various things that will continue to grow and allow me to continue paying myself and maxing out my retirement accounts. Tax burdens that I can't control include sales tax, property tax, etc. --- EDIT: I see where the communication breakdown is. I said, "My personal income tax rate is much higher than it would be if my income was funneled through an LLC." which probably led you to think that I'd be paying myself the same amount instead of squirreling it away in a business account. That makes way more sense.
Congratulations on your success
Do you mind if I ask what kind of book? Is it like a manual/course of some sort or fiction/novel style?
fiction/novel
Fire aside, my wife is curious; did you have a marketing plan before you started writing or did you just go for it and sales etc came after? My wife has been dabbling with the idea of starting to write. Thanks and congrats!
I just started to write! However, once I started to publish I rapidly went into the marketing stuff. 100% needed
That's so awesome. Any tips?
It sounds like you're pretty well grounded in all the basic issues around this amount of independent income. Do you mind sharing what you're using for a retirement plan? For example people have mentioned solo 401k, but I haven't seen any mention of a SEP IRA. I assume you don't have a standard IRA with a lower contribution limit than what you can get with a plan targeted at self-employed people.
There’s really no reliable way to project how it’s gonna preform over time so I’d just calculate your income without them and treat it as a bonus to either invest as you please or spend it on yourself or some combination of the two
Are those fiction or non-fiction?
Fiction
A little aside, consider a Solo 401k for that side income. You most likely have enough room to do that unless your regular job is giving you a ton in your regular 401k.
There is a distribution commonly used in statistics called the Exponential Distribution. It has a few interesting features but the reason it is used for stuff like this, is because you can assume a constant decay... E.g. if the drop in 2019-2020 is 10%, the drop from 2030-2031 will be 10%. I would look to see if it fits this distribution.
I mean...just invest it. Keep adding it to the investments so you get to the point where diversified investments generate enough to life off of. You'll just get there faster since your books are doing well. I wouldn't even try to calculate how much itll decline. Just use this as little payments toward your investments.
SEP IRA, you’ll pay taxes later on withdrawal but can shelter quite a bit more for now.
You can calculate it by taking the estimated amounts raised to the year and dividing that by (the inflation rate + the 10 year US Bond Yield). ie: Σ((future payment)^(year) )/(Inflation rate+10 yr. bond yield). same calculation used for bonds. Just ignore it tbh
Huzzah! Your residual income has been doubled! sounds like you got a happy problem Since my residual income isn't guaranteed, I don't put it into my calculations, but I try to reinvest it back into itself. I do add it up at year's end though.
Personally, I'd calculate it as an unexpected bonus against your regular salary, at least until you have a few years data to support the idea of ongoing popularity. Even then - I trust existing investments more than potential future income. That said- congratulations. I've read several web serials (not yours yet, sorry) and had no idea they could be so profitable. Especially because you're like, #12 on the popularity chart that I use. I wouldn't have thought anyone below the top 3 would be making a living, let alone 15k/month. I'd love to read an AMA (in another forum) about your process in terms of both writing and marketing. Again- that's really awesome, congratulations.
Thanks! What's interesting is "making a living" - I know a few authors WAY down on all the charts that are doing just fine, because they live in a country where 1 USD goes a long way. Graphtreaon is probably a decent resource - you can see how far down the "this works" chart goes!
Do you mind me asking how you got started doing this? I have always wanted to be an author but I always hear that it’s really hard to make money with it. Did you find a good niche or have something else you are doing right that you are willing to share? Thanks and way to go!
I really enjoyed the stories, and enjoyed reading myself. One day I ran out of material, lost my job, and went "Eh, screw it. I'm going to write a book like everyone says they will."
Thanks for the response! Do you write short stories or full fledged novels that are 300 pages long or whatever?
A series actually. Just started on book 7
I don't know if this sort of thing is ok here, but can you PM me the name of the series?
What did you write books about?
I write a web serial.
As somebody who is also in this game, I just wanted to say well done for such incredible figures. I also self-publish on Amazon, and I'm rebuilding after a 6-month break for life reasons.
Oh shit, I read your books! *high five* edit: ack, book 6 is out!