For decades, retirement was imagined as a time to step away from work entirely—travel, relax, and enjoy the fruits of years of labor. Today, the reality is more nuanced. Many retirees are embracing side hustles—part-time work, consulting, or passion projects that generate income alongside retirement.
In some cases, these ventures are driven by necessity—to offset rising costs or help cover healthcare expenses. In others, they represent a personal choice: an opportunity to stay mentally engaged, socially active, or creatively fulfilled.
While earning income in retirement may sound like a win-win, it requires thoughtful planning. From Social Security considerations to tax implications and lifestyle trade-offs, retirees should consider how additional earnings interact with their broader financial goals. A good monthly retirement income varies depending on individual needs and location, but many experts suggest aiming for 70% to 80% of your pre-retirement monthly income to maintain a comfortable lifestyle after leaving the workforce.
This article explores how side hustles can fit into a retirement plan—without overwhelming it.
Why Side Hustles Are Becoming More Common in Retirement
A few key trends are contributing to this shift:
- Longer lifespans: With retirements lasting 25–30 years or more, supplemental income can provide flexibility over time.
- Rising living and healthcare costs: Inflation and healthcare expenses are putting pressure on retirement budgets.
- Desire for purpose: Some retirees want to stay engaged and use their professional experience in new ways.
- Access to new opportunities: Technology and the gig economy make part-time work more accessible than ever.
Whether the motivation is financial, emotional, or a combination, planning how and why to work is just as important as choosing what to do.
Choosing the Right Side Hustle for You
Not all side hustles are created equal. The ideal opportunity is one that aligns with your energy, skills, and goals—without creating unnecessary stress or risk.
Examples That May Suit Retirees:
- Consulting or freelance work: Use your professional background on your terms, with flexible scheduling.
- Tutoring or teaching: Share your knowledge through online platforms or local programs.
- Hobby-based businesses: Turn crafts, woodworking, or art into modest income streams.
- Seasonal or part-time roles: Work at local businesses, golf courses, or event venues during specific months.
- Gig economy apps: Services like delivery, rideshare, or pet-sitting offer low barriers to entry.
The key is to identify work that supports—not detracts from—your retirement goals.
Balancing Energy and Income
A helpful question: Does this opportunity give me energy or take it away? It may also help to reflect on: Will this improve my financial plan in a meaningful way? When planning for retirement, it’s essential to calculate how much money you’ll need each month by first estimating your expected monthly expenses, including housing, food, healthcare, and lifestyle costs. Subtract any reliable sources of income, such as Social Security or pensions, to determine the amount you’ll need to withdraw each month from your retirement savings. This careful balancing of energy and income is crucial in creating a solid and sustainable retirement plan.
It may also help to reflect on:
- Will this improve my financial plan in a meaningful way?
- Is the income worth the time and effort involved?
- Is it sustainable if I want to continue for several years?
It’s easy for a side hustle to grow into a part-time job—or even a full-time commitment—if boundaries aren’t set.
How Side Hustles Affect Your Retirement Plan
While additional income may be helpful, it can create complexities around benefits, taxes, and retirement account strategies. Here are key considerations:
1. Social Security
- If you’ve claimed benefits before full retirement age, earned income may temporarily reduce your monthly payments.
- After full retirement age, extra income doesn’t reduce payments—but it may increase your taxable income.
2. Required Minimum Distributions (RMDs)
- If you’re age 73 or older, you must take RMDs from traditional IRAs or 401(k)s. Side hustle income adds to your total taxable income, which could affect your tax bracket or Medicare premiums.
3. Self-Employment Taxes
- Many side hustles classify you as self-employed, meaning you’re responsible for both the employer and employee share of Social Security and Medicare taxes.
- You may be able to deduct business-related expenses, and possibly contribute to a SEP IRA or Solo 401(k).
4. Retirement Contributions
- With earned income, retirees may still contribute to:
- Traditional or Roth IRAs (if eligible based on age and income)
- Self-employed plans like SEP IRAs or Solo 401(k)s for higher contribution limits
Understanding these dynamics can help you structure side hustle income in a tax-aware way.
Balancing Income with Lifestyle
Money matters—but so does how you spend your time. A balanced strategy accounts for both.
Ask Yourself:
- What’s motivating me to take on extra work?
- What’s my ideal income goal—and what purpose will it serve?
- What might I need to give up to make room for work (e.g., travel, family time, hobbies)?
Practical Tip:
Rather than working indefinitely, set clear income targets. Examples might include:
- “I’d like to earn $10,000 this year to fund travel.”
- “I’ll work part-time until I’ve paid off the mortgage.”
Clear goals can help prevent the hustle from overtaking your retirement.
Potential Benefits of Side Hustles (When Carefully Planned)
When incorporated thoughtfully, side income can:
- Provide flexibility during years before Medicare eligibility
- Reduce pressure to withdraw from retirement accounts in down markets
- Fund discretionary spending for travel, hobbies, or family gifts
- Offer engagement and fulfillment through work that feels meaningful
However, these outcomes are not guaranteed. Results depend on factors such as work availability, energy levels, and how income interacts with the rest of your financial plan.
Emotional Considerations
Working in retirement can offer emotional rewards like purpose, identity, and structure. But it can also come with challenges:
- Positives: Social engagement, routine, and meaningful work
- Negatives: Burnout, stress, or feeling like retirement hasn’t truly started
The goal is to strike a balance that works for your values, energy, and overall life plan.
Conclusion
Side hustles in retirement may offer supplemental income and fulfillment—but they require thoughtful planning. When aligned with your lifestyle and financial goals, they can be part of a broader strategy. But without clear purpose or boundaries, they may lead to tax surprises or lifestyle trade-offs.
By understanding how additional income fits into your retirement plan—and adjusting accordingly—you can make informed choices that support both financial stability and quality of life.
Whether you’re considering a side hustle to stay active or supplement income, it’s important to know how it fits into your broader financial plan. At TruNorth, we work with retirees to explore strategies that align income needs with long-term goals. Schedule a complimentary consultation to learn how part-time work can be thoughtfully integrated into your retirement plan.
Disclosure
This material is provided for informational purposes only and does not constitute legal, investment, or tax advice. Resolute Capital, LLC, dba TruNorth Advisors, is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training