Image source: Getty Images Though it’s only 5 January, I’m already getting excited about the prospect for my passive income this year. In fact, I’m far more enthusiastic than I was this time last year, because market conditions look so much more attractive one year on. Here’s why. Why I love passive income Unlike earned income from work, passive income is unearned, so it comes from sources outside of paid work. There are various types of unearned income, such as interest from cash savings, rental income from property, coupons (interest) from corporate and government bonds, and so on. But my favourite form of income by far is share dividends. These regular cash sums are paid by companies to shareholders, usually quarterly or half-yearly. However, not all listed companies pay cash dividends, plus these payouts aren’t guaranteed. Indeed, during 2020’s Covid-19 crisis, several of the UK’s biggest businesses cut or cancelled their dividends to preserve cash. What’s more, I’ve taken one powerful lesson about financial life from my great hero, American billionaire and philanthropist Warren Buffett. He once warned: “If you don’t find a way to make money while you sleep, you will work until you die.” And that’s why I keep collecting share dividends, either to reinvest in yet more shares or help pay my skyrocketing bills. Passive income set to surge in 2023 There are two main reasons why I think passive income is set to soar in 2023. The first is falling asset prices, because the value of global shares, bonds and property has slumped since 2021. The second is rising global interest rates, which bumps up yields on savings and bonds. For example, a couple of years ago, the best UK savings accounts paid rates close to zero. Now it’s possible to earn over 4.5% a year (before tax) from top-paying deposit accounts. Also, the world had a record $18trn of negative-yielding bonds in late 2020. This pile of debt paying negative interest rates has now totally disappeared. Nice. According to AJ Bell‘s latest Dividend Dashboard report into share dividends, UK dividends are forecast to leap by 8% this year to a record high of £87.7bn (versus £81.5bn in 2022). That works out to roughly £1,300 for each of the UK’s population of 67.5m people (although foreign investors actually own the vast majority of the UK stock market.) Of course, my goal as an old-school value, income and dividend investor is to grab as much of this passive income for myself as I can. And that’s why my wife and I have invested heavily in cheap UK shares over the past six months or so. Our goal is to build up sufficient assets so that we can retire in comfort and enjoy our time as ‘silver seniors’. Summing up Because I don’t plan to work until I drop, I love my passive income. The good news is that this unearned income is set to explode this year, thanks to lower asset prices and higher asset yields. And my sincere view is that investors buying income-generating assets now will do far better than those buying over-priced stocks 12 months ago!