Retirement can feel a bit daunting. You may have been working for decades, and now you have the freedom to do any number of things with your days. To ease the transition, many people turn to activities or hobbies to connect with others, generate a sense of achievement, and possibly even make money.
“Many people near or at the age of retirement don’t want to necessarily slow down,” said Roger Dominey, CLU®, ChFC®, CFP®, executive vice president of Coastal Wealth, a MassMutual firm in Jacksonville, Florida. “They understand keeping busy helps them stay mentally sharp, and may find it physically invigorating to stay flexible, healthy, and strong.”
Retirement activities and the income they may generate aren’t meant to rise to the level of even a part-time job — after all, you decided to stop working for a reason. But the extra cash may help make your hobbies self-funding or give you some walking-around money.
“Honestly, earning money is just a nice side benefit to doing things I already enjoy,” said Lyle Solomon, principal attorney at Oak View Law Group in Rocklin, California. Solomon is an older bankruptcy attorney who said he has been adopting hobbies he can dabble in after he retires. He said the opportunity to earn money helps him choose which activities to pursue among the many he enjoys.
To help you get inspired, here are several activities and hobbies you might consider pursuing in retirement and the benefits they could bring you. We'll also touch on practical issues regarding taxes and personal liability.
Dog walking and pet sitting
“One thing I have kept in mind in staying busy when I retire is that I want to keep my mind and body sharp, so I am now picking up hobbies that get me outside and exercising or work on coordination and concentration,” Solomon said. One of these hobbies is dog walking.
“My neighbors are younger and busy people, and I now do a lot of my work from home thanks to COVID, so they pay me $100 to walk their dogs a few times a week,” Solomon said. “I love animals, and I would be lying if I didn’t tell you I was considering starting a dog-walking business when I retire.”
Dog walking offers exercise, a feeling of being needed by both animals and their owners, and a sense of connection. In addition to regular dog walking, you could provide pet sitting for neighbors who are traveling or working long hours away from home. They will appreciate having someone not just providing food, water, and affection for their pets, but also keeping an eye on the house.
Sports coaching and officiating
Another opportunity to stay active and connected is through sports coaching or officiating. You'll have the satisfaction of interacting with kids or adults who want to excel, whether at playing a sport or just being healthy.
You could teach tennis or golf, become a personal running coach, or officiate little league sports. Credentials like “10-time marathon finisher” or “I played junior varsity baseball” may be all the qualifications you need. Workshops are available to hone your skills. (Related: Running adds life ... and other benefits)
Because his grandkids play soccer, Solomon said he has signed up to be a soccer official, which will pay $20 to $30 per match once COVID restrictions allow play to resume. Besides offering exercise, the activity lets him spend time with his family, and the compensation covers the cost of taking his grandkids out for ice cream after their matches.
Renting out your home
Renting out your home could help offset your costs if traveling is one of your hobbies — one that can easily become more expensive with the ample time retirement allows for it. Another option is to rent out part of your home while you’re around. In addition to the extra income, you may enjoy the opportunity to interact with the visitors who pass through.
In fact, being an Airbnb host can actually allow you to share one of your hobbies. For example, an Airbnb in Florida called Danville consists of structures the host has created from repurposed items he has collected. Other hosts have set up their properties as artist’s retreats with features such as ample natural light, peace and quiet, or inspirational landscapes.
Hosting is extremely flexible: You can rent out your home as often or as infrequently as you want. This sideline isn’t right for everyone, though. Renting out your home means additional responsibilities around maintenance, cleaning, and security to keep your renters (and yourself) happy and safe. And the biggest barrier is that many people don’t want strangers living in their houses.
If that’s you, consider using your talents to offer online experiences through the platform. Hosts offer cooking classes, games, language lessons, tarot readings, and more.
Painting, crafting, and baking
Many of us have an artistic side that goes underutilized during adulthood as we take up more lucrative activities like lawyering and marketing to support ourselves and our families. Retirement can be a great time to rekindle old interests.
“When I was younger, I took some art classes and dabbled in drawing and painting,” Solomon said. “Now that I am slowing things down, I have picked it up again. I have noticed it is like riding a bike — after a short time, I was drawing and painting just like when I was younger. I started showing my work on Facebook, and two people have offered to buy paintings from me.” (Related: Investing in collectibles: Buying and selling)
It’s easier than ever to find a market for your crafts on social media and through online marketplaces like Etsy, though the competition is arguably greater than ever, too. You can also display your wares in person at farmers markets, holiday markets, school fundraisers, and other local events. You’ll get to talk with people about your work, meet other creative types, and possibly earn some money.
Some people also put their baking skills to broader use in retirement. Have you perfected the art of sourdough? Let your neighbors know through platforms like Facebook, Instagram, and NextDoor. You can collect orders in advance for scheduled deliveries of your freshly baked bread. Some people will gladly pay a premium over grocery store prices for high-quality artisan goods that help them support people in their own communities. (See: The link between community and financial well-being)
Retirement hobby income: Impact on income taxes
Many people don't know about the tax implications of earning money from a hobby until after they've started doing it. But when your hobby brings in money, the IRS expects to get a cut. Meanwhile, you may not be able to deduct any losses from your hobby unless you run it as a business. As explained in IRS Publication 525, hobby expenses may be deductible only if you itemize on Schedule A.
Another tax consideration: You may have to pay taxes on up to 85 percent of your Social Security income if you earn enough from sources such as taxable retirement account distributions, interest, and dividends. That provisional income threshold is easy to cross: it’s $34,000 for individuals and $44,000 for couples. And there’s a lower tier — $25,00-$34,00 for individuals and $32,000-$44,000 for couples — where they may have to pay taxes on up to 50 percent of their Social Security income. So if you’re trying to stay under those levels, you’ll want to closely track your retirement hobby income. (Related: Taxes and retirement: 5 planning tips)
Depending on your hobby, there may be a benefit to setting up a business entity for liability and tax reasons. If you’re unsure, a financial professional can help you understand your choices. More broadly, a financial professional can help you with possible strategies to reduce your tax burden in retirement. (Need help? Find a MassMutual financial professional here)
Could your hobby generate personal liability?
“While staying active and earning income in retirement can be rewarding, one should always consider the potential liability that can occur as a result of their endeavors,” Coastal Wealth’s Dominey said.
Learning about and addressing the potential risks ahead of time could prevent you from incurring a large liability that you’re not equipped to handle.
Volunteering as a youth sports coach has caused individuals to be named in negligence lawsuits after a participant’s injury. However, you may be able to join an association that provides liability coverage for its members. An example is the American Baseball Coaches Association, which provides amateur baseball coaches with a $1 million personal liability insurance policy for an annual membership fee of $75.
Pet sitting or dog walking insurance can provide general liability coverage for incidents such as pet injury, illness, or death; third-party bodily injury; and property damage. If you care for animals through someone else’s company, don’t assume it provides you with liability insurance; you may need to purchase your own. Similarly, while a pet owner may carry pet insurance to help with veterinary bills for illness and injury, their policy will not protect you against legal action.
Airbnb’s host protection insurance can provide liability coverage up to $1 million in case a guest is injured or their belongings are damaged on your property. In addition, the company’s host guarantee can protect your property and belongings against damage by a guest. Still, it would be wise to discuss coverage with your homeowners insurance provider before becoming a host. Your existing policy may not cover losses caused by renters.
Food liability insurance through various providers offers coverage to people who make a hobby of selling homemade food. It can protect against personal injury claims due to undisclosed allergens or food-borne illness.
“Stay active in retirement, enjoy life, and have fun, but remember to seek legal counsel and liability protection from your property and casualty insurer before embarking on any post-career activities,” Dominey said.
Retirees don’t always find it easy to identify meaningful activities to fill their days. A hobby can primarily be a great way to stay engaged; the income can be secondary.
“For me, it is just a little bit of extra spending money,” Solomon said. “I can use it to go out to eat, or take my grandkids somewhere special without having to budget for it.”
If your hobby also pays for itself, provides extra cash for your day-to-day needs, or supports other activities you enjoy, that’s a nice bonus.
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