Incidentally, I don't consider my investment income to be unearned, whatever the IRS may call it.

I wouldn't consider investment income to be "unearned" either. However, a lot of us on TMF are probably more into finances & investing than the general populace. Still, no one is paying me to work on my investments. :)

Do I spend less than my investment income? You bet I do. I've been a dedicated LBYMer, my entire life. I spend less than my taxable income...and that doesn't count the income in my retirement accounts.

When I can spend less than my investment income, then I'll consider myself financially independent. I'm not at a place where I can do that yet. (Full-time graduate student.)

oh & when I went back to school, I did not break into my 403b. I rolled most of it over into an IRA. But this is one big area where average people make a mistake -- cashing in their 401Ks (or equivalent) when they switch jobs. Then there's the folks who totally stopped contributing to their 401Ks in the latest bear market. Missed out on some fine market lows/buying opportunities.

jmc