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Living off rental income

In this article I want to explain to you what is meant by living on an income, how it is possible to do it and how much money you need to have to hope to live this way.

A very interesting topic that is worth dealing with

I bet that you too have already asked yourself the fateful question at least once:

“How to living off rental income income?”

do not lie:)

Rest assured you are not the only one, many are asking this question and soon we will analyze in a practical way the requirements necessary to live on an income

let’s start from the starting point 

but what does it really mean to live on income?

you will learn it in a few minutes …

Living on annuity meaning


The rent, in economics, is defined as the income received by virtue of the ownership of a scarce natural resource ( Source Wikipedia )

“Come on jean too many complicated words, translate it into simple words”

ok, now I’ll explain 🙂

rent as income by virtue of ownership of a scarce resource is, for example, the possession of land

land is by definition a scarce natural resource and therefore land ownership gives you the opportunity to earn a rent from it

EXAMPLE : Mario has a land, Mario builds a house on this land, Mario allows Paolo to use this house as a home in exchange for a rent

so it’s clearer right?

living on an income means obtaining income from property or investments that allows us to pay our expenses

Those who obtain an income that can cover their needs live on an income and these income can be of different types: financial income, real estate income, royalties, films, books, patents, etc.

What is a passive annuity?


The income as you will have well understood is the investment gain, 

an income is considered to be the result of an invested saving, 

let’s take some examples: buying a house to rent, owning shares that pay dividends, interest on bonds, royalties, patents, etc.

Passive income is a very important concept that is linked to the concept of passive income

[Related Articles ->  Passive income: a way for a few ]

this kind of operations allows you, after a fair use of initial energy and time, to divide the time and work relationship and above all to be able to have great long-term gains with almost no effort

the most powerful companies in this world work on this concept

ultimately passive annuities are those earnings that do not depend on your time that’s why we can consider them passive earnings

Living on an income without working


“Yes, but Jean tell me immediately what I need to make a living”

the answer is very simple, just one word:


Capital is the set of goods destined for productive uses to obtain new production ( source Treccani )

in simple terms everything you own that can make you earn an income

the money you have in the bank is part of your capital, as well as the property you rented is part of your capital and the money you have blocked in investments ..

“Ok Jean, but what if you want to live on an income without working?”

but why do you want to stop working? look how beautiful working is 🙂

Oh well let’s see how it can be done:

Let’s say you have a job that you don’t like and your boss is a real f *** ing head

You earn $1,500 each month which is neither too much nor too little

how much capital do you need to have an income of 1500 per month?



“It’s not true Jean, I don’t believe you”

It is true that some data is missing but do not worry, in a few minutes I will explain how I managed to get to this figure

Follow me!

as you can see for a modest sum of $1,500 per month you need $600,000 of capital (believe me!), which makes us understand that the fundamental point to live on an income is absolutely the capital

There are two starting situations when it comes to capital:

situation 1 – you already have a large capital -> this is the simplest and also the rarest option because you don’t have to build your own capital

if you were in this situation you can directly dedicate yourself to the life of an annuity (for example an inheritance …)

situation 2 – does not have a capital -> the most difficult option and also the most common because it requires you to build your capital , 

a long process that goes from saving to accumulating money and ending with the investment

Is it possible to live on an income?

The purpose of this article is precisely to answer this question or at least make it more practical ( less chatter and more concrete )

the answer to the question “ is it possible to live on an income? “is:


I’m not saying it, this LINKIESTA article demonstrates it   on Italians who live on income -> “Rentier, Less and less, always richer”

a very interesting article that I recommend you read

which tells us that between 2011 and 2016 the number of rentiers (people who live on income) dropped by 8.4% but that their earnings have nevertheless increased by 1.71%

in practice not only do they exist but even in recent years their income has increased

Living on an income is possible, the fundamental condition is always the same: Having a large capital

How to live on income?


the number one rule that must be respected to live on an income is:

Having an invested capital gives us income that can pay all our expenses

once we understand this point we can start thinking about the strategy

STEP1 calculate your monthly expenses -> monthly expenses change from person to person, this parameter must be calculated according to your needs according to your family situation and according to your economic situation

as you may have guessed, a person with lower monthly expenses will need less capital

and therefore it will take less time to reach that capital

the speech is contrary for a person who has larger monthly expenses

the calculation of your monthly expenses will allow you to estimate the amount of the income that you will need to live month after month and year after year without having to worry about your finances

STEP2  increase revenue -> fundamental point to be able to reach the necessary capital and also the point that we like to treat more on FREENANCER , increasing revenue allows you to save more and therefore invest more

STEP3 choose the return on your capital -> the last point is to choose the return on your capital

during my calculations I often refer to a yield of 3%

I think it is a relatively easy return to obtain and above all realistic in the financial market in the long term and it is therefore the return that I also recommend you to use during your calculations

once you have the main steps it is time to reveal the formula that can help you in calculating your capital:

Capital (for the rate of annuity) = (Monthly expense x 12) / Yield 

Ps: I  use this very simple formula for simplification purposes, for a detailed calculation other parameters such as inflation, compound interest etc … the result of this formula is not precise but it gives us an order of magnitude

Calculate how to live on an income

Remember the formula:

Capital = (Monthly Expense x 12) / Return; (with a yield of 3%)

let’s make an example: 

a person who has a monthly expense of $1,500 needs:

(1500 x 12) / 0.03 = $600,000 (that’s where the $600,000 came from before :))

while a person who has a monthly expense of $1,000 needs:

(1000 x 12) / 0.03 = $400,000

you will have noticed how a difference of $500 translates into a change in capital of $20,000

Remember : never waste your money because a few hundred euros can make a difference in the long run

You can live on an income

but .. it takes a good capital 🙂

There are several ways to live on an annuity, the two most common ways are: 

  • Living on financial income

To live on financial income is meant to live thanks to the return on one’s capital invested in financial instruments 

  • Living on real estate income

By living on real estate income we mean the capital invested in real estate that generates rents that cover our expenses

How much money do you need to make a living?

There is no absolute answer to this question, there are many factors to take into consideration to answer this question, for example the cost of living (living in Milan is different from living in Cuneo), monthly expenses, financial situation etc. . 

we don’t all have the same personal needs, but let’s try to make some estimates:

Living on an annuity with 100,000 euros

Is it possible to live on an annuity with $100,000 ?

how much can we expect monthly with a capital of $100,000 ?

let’s do the calculation with our formula:

capital = (monthly expense x 12) / 0.03 

Monthly expenditure = (capital x 0.03) / 12 = $250

Answer : With a capital of $100,000 and a monthly return of 3% we can expect around 250 euros per month

a sum that is not at all sufficient to live off an income

Conclusion: you cannot live on an income with 100,000 euros of capital

Living on an annuity with 500,000 euros

what we can expect monthly with a capital of $500,000

we do the calculation with our formula

capital = (monthly expense x 12) / 0.03

Monthly expenditure = (capital x 0.03) / 12 = $1,250

Answer : With a capital of $500,000 and a yield of 3% we can expect around $1,250 per month

sum that can allow a life of income but as long as you are not spendthrift, do not have many vices (and probably do not have dependents)

Ps: I  use this very simple formula for simplification purposes, for a detailed calculation it would be necessary to consider other parameters such as inflation, compound interest etc … the result of this formula is an underestimation that is not precise but it gives us an order of magnitude

How long does it take to live on an annuity at 50?

This is a question that is often asked, many people are interested in knowing how much it takes to live on an income at 50

let us try to answer this question as well

Obviously a question of this generates or in general all questions regarding money cannot have definitive answers

There are so many factors that come into play, geographical factors (Living in Milan is always more expensive than living in Cuneo :)), family factors (getting to 50 years old single, however strange it remains different from getting there having to support a family) and other factors which depend on situation to situation

there are two ways to calculate how much money you need at 50,


Let’s say you want to live on $1,500 per month

the average life expectancy of a 50-year-old is 32 years

this means that in the best of cases what you want is to be able to constantly receive your $1500 per month for 32 years

How much does all this do?

the formula is very simple:

1500 x 12 (months) x 32 (years) = $576,000

Conclusion : to live on an income without investing your capital, you would need $576,000


Let’s assume that you also want to live on $1,500 a month in this case

the life expectancy of a 50-year-old is always 32 years

this means that the return on your capital must allow you to have 1,500 per month

what capital does it take to have an income of $1,500 per month (with a return on capital of 3% net per annum)?

Go with our formula!

Capital = (Monthly expense x 12) /0.03

(1500 × 12) /0.03 = $600,000

Conclusion : to have $1,500 of interest you must have invested at least $600,000 at a yield of 3% per annum

Remember:  These figures are indicative and the calculation does not take into account factors such as inflation and compound interest and others .. but it allows you to have an order of magnitude


In conclusion we have seen that living on an income is possible but ..

I repeat once again…. it takes capital 

the key points of this process are:


in this blog we talk a lot about earning and I believe that online jobs can help a lot in increasing your earnings

[Related Articles ->  Earning Online ]

Save money

saving is the basis of any healthy budget management, I think that people cannot afford not to save and that the lack of savings (apart from extreme conditions) is a lack of financial education


Investing is the third step of our pyramid,

do you want to live on income?

then you have to start investing your savings right away !!

PS: let me know what you think of the article and if anything is missing to complete it in the comments !! thank you !!

your friend Jean