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I bumped into a friend a few months ago. I knew he’d retired about two years prior, and since I was just on the cusp of doing so, I steered the conversation toward how he was enjoying himself.
As we talked, he revealed he was pretty stressed out and far too busy to enjoy himself. Surprised by this confession, I pressed him for the reason.
It turns out, being good with his hands, he had always fancied having a go at picture framing and purchased some equipment for this endeavor. He thought he could maybe make a few dollars and fill a bit of his spare time. Things have gone better than he expected, and it’s snowballed into an enterprise taking up all his time, to the extent he may as well be working full-time and more! He’s also breached the UK turnover threshold for sales tax (VAT) and needs to register with the tax authorities and keep detailed records of his sales. He’s somehow let it get out of control because he doesn’t want to let customers down.
Thinking about it during our conversation, I remarked he was maybe letting himself and his wife down, and that was possibly more important than the customers. That may sound a bit blunt, but I knew he and his wife had been looking forward to his retirement and had quite a few plans to enjoy their time together, which now seemed to be on long-term hold.
We finished our conversation and went our separate ways. But this got me thinking: side hustles in retirement are possibly not always what they’re cracked up to be. Maybe my friend should have thought things through a bit more, and although he couldn’t have known he was going to get so busy, having some guidelines around what is “enough” for his retirement project would have paid dividends. More time with his wife and plans, for one thing.
What might he have done differently? In my mind, keeping his turnover down would have been a critical step, and limiting the number of hours he devoted to the side hustle would have been another. Learning that “no” is a sentence all by itself and doesn’t need any explanation would have been a good start. He could still have had an enjoyable pastime and a bit of money in his back pocket without robbing himself of the most valuable asset there is: time for himself and family.
Because he knows I have a financial and business background, he had asked for help with his sales tax problem. I politely declined helping, pointing out I was soon retiring myself and wanted to keep my time free for my own future plans and projects. I hope the next time I see him, my blunt message got him to think things through, or maybe my more subtle message about plans for my own retirement time gives him pause to reconsider his own original retirement goals. My final thought as I left my friend was how ironic his very success has really been his retirement failure.
Here in the US we have a different set of problems. Sales tax is easy enough – just get a reseller license from your state, collect sales tax, and send it in quarterly. The IRS? File a schedule C and pay your income and self-employment tax after subtracting all your expenses.
But you still might not want the business to get too big and take up all your time. You can always charge higher prices to discourage customers.
Interesting but an easy trap to fall into for labour intensive and “rare” jobs like picture framing that also have a heavy emotional component for customers.
I’ve got in mind a hobby job I’d like to see if I can make work for some cashflow and stimulation in retirement. Deliberately haven’t started yet because don’t want extra income/tax. Will try to let UK VAT threshold keep a lid on any ambitions though reality is I’d probably be more than happy if it could gross near that amount.
Will you please explain to a Yankee how the UK VAT affects your decision? We don’t have such a creature in the US.
To encourage small businesses we have a £90,000 turnover threshold before having to change sales tax on our customers bill
And if you stay below the threshold you avoid the admin plus the cashflow consequences and can make more profit.
You buy in at £50 (input VAT included £10)
You sell at £100 (Including output VAT £20).
Below VAT threshold you make £50 profit
Above you make 80-40 = £40 profit and pay the VAT difference to taxman.
This assumes your customer doesn’t expect you to charge VAT or wants a discount if it’s not included. Most B2B transactions you’d be expected to be VAT registered so they could reclaim input VAT.
Old habits die hard, such as wanting to be liked, to please everyone and do the best job ever. How about a job that pays nothing but you derive satisfaction from filling a need, until you realize that your “job” is distracting you from enjoying your retirement and spending time with the people you love? That’s what happened to me when I joined the board of a local nonprofit. As in the story of Mark’s friend, when you realize that your part time gig, whether paid or volunteer, is taking away from the things and people that you had looked forward to, it’s probably time for a re-set.
You just gave him the greatest lesson on how to say “no”. Maybe he’ll learn from it.
I enjoy the consulting work I have done for the last 30 years, but I don’t really have a problem saying no to potential clients because of my lifelong and worsening medical condition — LAS, which stands for Lazy-Ass Syndrome. The older I get, the less motivated I am.
In all seriousness though, Mark, I think I have always recognized on a subconscious level that financial success sometimes contributes to life “failure” in that it takes precious time away from vital endeavors like sleeping in with your wife, watching the Cubs game when you should be working, and photographing sunsets.
Everything is a balance. And in the final analysis, maintaining that balance is the most important side hustle any of us could ever have.
I’m not self-employed but I retired from an industry for which my particular skills are in high demand. At least six different organizations just within my former company have reached out to me asking for help since retirement. I work two part-time jobs and try to keep my combined time to 20 hours a week or less. I have a network of friends who were former colleagues that are also working encore careers because of the industry situation. Why do we do it if we don’t need the money? As my friend Tom puts it, “we want to be helpful and liked.” Same friend cautioned me not to fall into the “hero complex”, which could turn a pleasant side gig into an stress-inducing time sink.
Ken, you may find that by limiting your hours, you’ll become even more of a hero. My clients always thank me profusely. Much more so than when I was readily available. It feeds my own hero complex perfectly.
Mike, that’s a great insight and is consistent with my experience.
Since I have yet to “retire,” I guess I am trying to ramp down my work. I’ve been self employed for 7 years with a significant gap due to caregiving responsibilities. I restarted my self employment last fall with an enjoyable project that had some travel out west. Low hours and low stress. In January, I took on an interim CFO job out of state. It involved travel every other week. It was supposed to last 3-4 months. Basically, work through the cold Michigan winter with some southern travel. I am now at 7 months. It has made me rethink my goals in working. At 68, I don’t need the money. The stress has been too much and I have basically missed a summer of travel with my wife. Do I just do project type work or “retire”? When you are self employed, there is no magic number to achieve and you will not be laid off. The phone may ring less often or I may choose not to answer.
Many small business ventures are by their very nature open ended agreements. These are situations to be avoided unless one is willing to make the necessary commitments.
Of course, these agreements can be altered. But once the sales and marketing are underway it is best to be ready for growth (or failure). One needs to be cognizant of the realities about the hours that one is willing to work, the various permitting and tax requirements and finally the obligations that would occur if an employee is necessary, even a part-time one.
There is a point at which a side hustle morphs into a business with all of those obligations. Like investing, it may not be easy nor is it a free ride. Even a “simple” business in which one sells goods made by others will require taking all of the steps to honor a sale once it has been accepted. It may be merely ordering, taking delivery, paying suppliers, wrapping, shipping, billing and paying sales taxes. Then there is the accounting, taxes and insurance. It all seems so easy until it isn’t.
There is a reason the black markets flourish (these shadow economies are estimated to be 13% of GDP in developed countries. It is reputedly 5% of U.S. GDP and 20% in China).
This is his opportunity to hire, train and offload-to-a-bright-youngster much of the day-to-day operating of his business. It will give him the time he needs to catch-up while being the CEO. The youngster will love it. Maybe he needs more than one.
Good luck with that! I’m speaking from personal experience. Even the nearby ice cream parlor has had difficulties using that approach.
In my business I created openings for part timers. Guess who really loved it? It was the mothers we hired to work flexible hours of 20 to 24 each week. We paid well (these weren’t minimum wage jobs and there were benefits, too). An advantage we had was many of these women had health insurance via a working spouse, which can be an impediment in such situations.
One limiting factor was the time available to manage this approach. Every hour I spent was a deduction from billable hours.
That’s actually a good idea 💡
When I retired at age 66, I resolved to never work for a paycheck again. I wanted to give back to Christian ministries plus spend more time with my wife. I started working part time with a global ministry as a management consultant. Most jobs in their IT group were full time which limited my roles, but I was ok with that as I felt that I made some positive contributions to the ministry.
I had spent 5 years of my career consulting, so I knew how seductive that could be. About 6 months into retirement, I got a call from my former boss in consulting, and he had an opportunity for me. The pay would be great, but I could see myself getting pulled into a much larger and longer term role. So I politely declined. No regrets.
I had plans to do consulting after retirement. I was hoping for my former employer, but that didn’t work out. I did however consult for a short period with a union on employee benefits.
I quickly learned it was not what I wanted. I enjoyed it, but not the limits even a few hours put on my freedom. Not fair to family either.
Thanks Mark, nice title. I can imagine how this situation comes about – you spend all your working life trying to increase your customers, optimise your throughput, grow your profits. Once a retirement side hustle starts to get some momentum, I can see how old habits would kick in. You’re right that some pretty strict guard rails need to be put in place to stop it turning into just an extension of your working life.
I hope your conversation helps him find a more appropriate balance.
Clever title. 😉
I’m not especially interested in a paying side hustle now that I’ve retired, though there are things I could do if I chose to. But I can absolutely see how I could fill up my time to the point that I’m not enjoying retirement as much as I’d imagined. It’s flattering that people still want me to do stuff, but I don’t want to have the same levels of responsibility that I had as a working person.
Glad you noticed. I was pretty chuffed with myself coming up with the title!
“No” seemed to be the hardest word. I had set a goal of 500 clients for my tax practice. That was a number that allowed me to be home by 6PM on weekdays (5PM on Fridays), 2PM on Saturday, and a day off on Sunday.
But I never got the “No” memo, and at 650 clients, my work hours increased and so did the stress. Thankfully I found a buyer for my business, and am now living happily ever after.
I can relate a bit to your friend’s situation. But just a bit. A few months after I retired I decided to try consulting part time. I got some work and frequently it was short stints of a week. I had a plan to work a week per month and spent the rest of the timing enjoying retirement with my wife. I have had some busy months where I worked 3 weeks and one or two particularly busy years. There have been a few times I have been stressed to get everything done properly. My wife would needle me a bit about the one week per month plan. And the business has it’s administrative challenges with book keeping, contracts, and additional complexity to income taxes. That all being said, as I consider slowing down now at 69, my wife and I been able to do what we wanted to do and the benefits have far outweighed the few moments of stress. Pretty sure my wife would agree with that. I’ve been able to enjoy contributing and helping and have been paid well for it, allowing my wife and I to delay drawing Social Security and pensions (and of course increase the payouts) and not draw from our retirement accounts and savings, even putting a bit extra away. We can even write off both of health premiums on our taxes due to self employment law which is not insignificant. On many business trips my wife went along, find something to do when I was working and then we added on personal trips to explore new places. I did manage the amount of work I took by increasing my hourly rate and not pursuing a number of opportunities so perhaps that is the difference maker. I never wanted to work full time and didn’t.