Looking to retire from a full-time job but still keep a foot in the working world? You might hang a virtual shingle in the so-called sharing economy, driving for Uber, hosting guests through Airbnb, or using TaskRabbit to offer your services as a dog walker or home-technology consultant.
Eight percent of U.S. adults earned money from an online work platform in the past year, while 2% sold handmade goods online and 1% had income from home-sharing sites, according to the Pew Research Center. Seniors are less likely than younger generations to participate; for example, about 2% went online for gig work. But older people who venture there typically earn a bigger share of their income online, as the graphic below shows.
Sharing-economy work can add more social interaction and challenges to your day, as well as make your savings last longer. Here are three pointers to find your way.
1. Carve Out Your Own Schedule—and Goals
Chances are, this labor is just one of many activities you are looking to fit into your retirement lifestyle. So plan how and when to work. "You could decide that you want to work set hours, giving yourself a little more structure," says Karen Van Cleve, a personal and business coach in Lakewood, Colo. For instance, if you're an early riser, you might drive for Lyft from 5 a.m. to 8 a.m. on weekdays and keep the rest of your time free.
Or you might aim to earn a certain amount of money each month and then, once you hit that goal, give yourself free rein to schedule more social events and last-minute travel until month's end.
2. Treat It Like a Business
If you spent your career as an employee, recognize that you are now running your own business. How much money you'll need to earn to make your efforts worthwhile depends in part on expenses, like your tab for professional photos to attract home-sharing guests or transportation from store to store for your gift-buying service. If you have multiple ideas, compare the potential payoff; making handicrafts may be fun, but consulting work tied to your professional experience may pay far more for each hour you put in.
You may need to augment your insurance coverage if you are, say, using your car in a ridesharing service. "If you're a senior, you do not have time to replace the nest egg that an uninsured accident could destroy," says Tony Steuer, an insurance industry consultant in Alameda, Calif.
3. Trim the Tax That You'll Owe
The expenses you incur in your business reduce the amount of your income that will be taxable. So keep a good tally with a tool such as Quicken or BizXpenseTracker. To cut your tax bill further, make deductible contributions to a SEP-IRA or one-person 401(k), suggests Kristi C. Sullivan, a financial planner in Denver. If you are older than 59½, you'll be able to withdraw dollars at any time without tax penalties, although the delayed tax will then be due.