If you are planning to retire this year, there are many things to consider when it comes to how you manage your finances, spend your time and stay purposeful. While the idea of stopping work altogether probably sounds pretty great, many retirees find that keeping themselves connected to some kind of day job helps with many aspects of the transition, not to mention their finances.
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Social Security benefits and retirement income don’t seem to last as long as they used to, so starting a side hustle just might be the perfect way to bring in some extra cash and stay sane. And now that side gigs are easier to find and do from home than ever before, it could be a great move for any retiree. Here are seven reasons why experts recommend you start a side hustle when you retire.
Cost of Living Is Higher
Perhaps the most rational reason to take on a side hustle is that everything is likely more expensive than when you planned for retirement.
“Inflation has raised the cost of everything, from groceries to healthcare,” said Ed Huang, a side hustle and finance expert at SideHustles.com. “And when you’re living on a fixed income, that can be pretty overwhelming.”
Huang explained that a side gig may provide additional cash to cover those rising expenses and give you some breathing room.
Catching Curveballs
Life continues to throw curveballs your way, even in retirement. These curveballs, or unexpected expenses, could be “a medical emergency, a leaky roof or helping out a family member in need,” said Huang. No matter what the expense is, covering it can easily strain your retirement budget.
A side hustle can provide you with a financial safety net so that you don’t have to dip into your retirement account every time something unexpected comes up.
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Providing Structure and Purpose
In addition to having supplementary income during retirement, a side gig can help with the transition into retirement by giving you a fixed schedule and adding structure to your days, explained R.J. Weiss, certified financial planner (CFP) and the CEO of The Ways to Wealth.
“Some retirees find that side hustles can provide a sense of purpose, making them feel like they’re giving back or even growing personally by adding new skills,” said Weiss. “The potential income is a bonus, creating a financial buffer that could be useful later.”
Stock Market Volatility
Many retirees are invested in the stock market. While this can be a great way to grow your wealth, the market can be volatile at times. According to Huang, “If your retirement savings are invested in the market, you have to be a little apprehensive about how those ups and downs will affect your retirement plans.”
A side gig can provide a predictable income stream to balance out that uncertainty.
Keeping One Toe in the Water
Huang also pointed out that retirement can be “jarring” for many people as they go from working every day to not working.
“Easing into retirement by starting a side gig lets you stay tethered to the workaday world as you adapt to a more fluid schedule,” said Huang. “It also gives you time to figure out what retirement looks like to you.”
Staying Connected
Moreover, Huang suggested that a side hustle can also help you stay connected. Staying socially involved really contributes to how much you enjoy your retirement, whether you’re networking with people in the same field or meeting people in your community. The right side gig can help you expand your social circle and keep you engaged with those around you.
Leveraging Your Talents
As Weiss explained, many retirees leverage their career skills by giving back through consulting, tutoring or teaching.
“There are so many options these days,” added Huang. “You can teach online, work locally with students or even host workshops in photography, cooking, etc.”
On the other hand, Weiss shared that “[Other retirees] prefer a complete shift from their jobs and enjoy staying active by working with their hands, taking on light handyman work or even starting to sell handmade goods online through platforms like Etsy.”
Either way, a retirement side gig can put your talents to good use while making you extra cash.
However, Plan for Taxes
While side gig income may be great for many reasons, it is taxable. If you make enough money, Huang warned that you could get bumped into a higher tax bracket, so you have to save money for that.
However, Weiss pointed out that your overall tax rate might still be much lower than it was when you were working full-time, even if you’re taking Social Security. “Plus,” he added, “earning income allows you to contribute to an IRA, which can keep growing tax-free.”
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: 7 Reasons Why You Should Start a Side Gig If You’re Retiring This Year
