Yahoo Finance I’m a Retirement Planner: Why You Should Start a Side Gig in Retirement
You might think of retirement as a period in your life where you no longer work, but that doesn’t have to be the case. For some retirees, retirement means ending their primary career and then transitioning to a new phase of life, which could still involve some labor, but perhaps more on their own terms.
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Indeed, 50% of Americans who are not yet retired plan to still work in retirement, according to a survey by Transamerica Center for Retirement Studies. One way to work in retirement while still maintaining flexibility is to start a side gig.
The beauty of side gigs is that they can be whatever you want them to be. Writing, teaching and starting an e-commerce store are just a few of the many possibilities. Some even fall more on the passive income side, such as renting out empty space in your home.
For some retirees, side gigs provide important income streams to cover gaps that retirement savings and Social Security do not fill. For others, working in retirement provides an important social and mental benefit, even if the money is not the prime motivator.
“For retirees who have the freedom to work by choice and not necessity, a side gig can be a unique and fulfilling part of their retirement. The advantages of a side gig are not only financial, but very much psychological,” said Jacob Sadler, CFP, founder and senior advisor at Curio Wealth. Here, Sadler explains some of the top benefits of having a side gig in retirement.
Reduce Financial Pressure
While you might be able to retire without a side gig, it can be hard to pull off comfortably. A side gig can help give you some cushion so that you’re not worrying as much about making ends meet in retirement.
Even if you only make a few hundred dollars per month from a side gig, that can be a nice supplement to your retirement income.
“The financial benefits of a side gig are often far more impactful than many realize. This impact can be especially hard to see if they are comparing their side gig earnings to what they were earning prior to retirement,” said Sadler. “The effect of these side gig earnings are that they typically enhance a retiree’s ability to spend, while simultaneously reducing pressure on their portfolio and other resources to deliver the income that they need.”
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Improve the Transition Into Retirement
The added income from a side gig can be particularly helpful as you go from your regular salary to retirement income sources, like drawing from your retirement investments and Social Security. These retirement income sources might provide less than what you earned during your main working years, so without a side gig, it can be hard to make that adjustment.
A side gig can also ease worry about drawing down your retirement portfolio.
“Early in retirement this can play a critical role in a period of time where retirees are more likely to spend at a higher rate, and are more susceptible to lasting damage from a sequence of poor returns in their portfolio,” said Sadler.
Plus, the lifestyle transition from working every day to being retired can be hard to handle, but a side gig can help in this respect.
“A side gig can provide social interaction, intellectual stimulation, and help ease a retiree’s mind about not having a paycheck anymore. These advantages can help smooth the transition into retirement for some retirees,” said Sadler. “It’s like wading into the water rather than jumping in head first.”
One caveat to consider, however, is that a side gig might reduce your Social Security benefits, depending on your income and whether you started taking Social Security before your full retirement age.
Finding the Right Side Gig
Because there are so many types of side hustles, you might feel overwhelmed about which one to pursue in retirement. However, with some self-reflection, you can find one that helps you meet your goals and enjoy retirement.
Consider how you like to spend your time and if you can make money from your hobbies, for example. Do you enjoy helping others? Maybe you could teach a course online for a modest amount of money.
“It is a journey of self-discovery to a certain extent,” said Sadler. “The most important thing to think through is what are your driving motivations. If it is money, that will lead you down one path, but if it is flexibility and time, that may lead you down another path. Do you want to stay in your field of experience or expertise, or do you want to try something new? Asking and then answering these questions is essential to finding the right gig.”
And don’t assume you have to wait until retirement to figure this out. Part of your retirement plan could be identifying a side gig before you retire.
“You have to keep your ears to the ground for opportunities,” said Sadler. “Oftentimes people arbitrarily identify a retirement age and expect that they will easily find a side gig to help cover expenses. The reality is that the perfect side gig may or may not exist. It is necessary to keep an open mind, and when the right gig presents itself, you’ll know it.”
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