06 May How to Increase Retirement Income with A Side Hustle
Have you ever asked yourself, what would an extra few hundred or few thousand bucks do to accelerate my path to retirement? Having an extra side hustle or two can be the difference of reaching your retirement savings even tens of years ahead of schedule. Here’s how to build a side hustle that will accelerate your retirement savings plan.
The average income in the US is about $56,516 per year.[i] Traditionally, with the average income over the years, it takes a family or individual approximately 40-45 years to retire, if they save for retirement on a regular basis. Employers used to offer pension plans to help consumers save for retirement, whereas today very few employers have that option. This puts more responsibility on consumers to save for retirement.
How To “Side Hustle” Your Way to Retirement
A side hustle is extra work outside of your regular job, that you do on the side to make extra money. Whether that be a part time job stocking shelves in the evenings, or whether it be providing contracted work to local individuals and businesses a few extra hours a week, the options are nearly endless.
Your plan might be to retire earlier than you originally planned, or it might simply be to save more money for retirement so you can enjoy a healthier income in retirement. First, we’ll show you what an extra few hundred bucks saved per month can do to accelerate your path to retirement, then we’ll show you how to start building your side hustle income.
How Much Does One Dollar Saved Today Equal in Retirement?
Have you ever asked yourself what one dollar saved and invested today would equal when you retire? Doing some basic math, and assuming inflation is 3%, here’s what one dollar saved and invested today will equal in 30 years:
- Given the following:
- 3% annual inflation rate
- 9% annual investment return
- Net investment return is 6% (9% annual return – 3% inflation = 6%)
- 30 years until retirement
- $1 invested today is equal to “approximately” $6 thirty years from now with inflation.
In other words, for every dollar you save for retirement, you are creating $6 of savings for retirement. If that doesn’t motivate you much, here’s what that means in larger dollar amounts:
|This Amount Saved & Invested Today…||…Equals This Amount in Retirement|
Using a side hustle is a sure way to achieve this goal, and this step by step process will help you get started…To understand that even better, think of it like this; by saving $1 today you may have $6 in retirement. If you save $10,000 today then you may have $60,000 in retirement. Sound like a good deal?
Your First Side Hustle & How to Get Started
Finding ways to make extra money and turn into a side hustle is much easier than you think. All you have to do is find out what you’re particularly good at and look for ways to charge people for it. Your best starting point in finding out what areas you can create a side hustle in is by asking yourself questions like:
- What do I do in my spare time? (sports, exercise, read, play instruments, etc.)
- What am I naturally good at? (Math, numbers, reading, writing, organizing, etc.)
- What did I learn to be good at from my education? (Psychology, accounting, business, etc.)
- What have I learned to be good at from my career? (Sales, phone skills, communication, leadership, etc.)
- What am I generally interested in? (Sports, music, outdoors, shopping, etc.)
- What do I want to learn about? (Finance, leadership, sales, music, teaching, etc.)
There is no right or wrong answer. The idea is to find out where you want to spend time, and learn how to monetize it.
Learn How You Can Monetize Your Expertise
Once you’ve determined the area you wish to start making more money with, consider the following ways to generate income:
- Look for part time or contracted work locally that fits your schedule and pay amount
- Market that product or service on social media to publicize your specialty and attract work
- Offer your work as a freelance service online
- Create an online course teaching other people how to learn that skill
- Open up an ecommerce store to sell your product or service within your area of interest
- Offer one on one lessons both in person and remotely via skype or video conference
- Provide consulting services for businesses needing your expertise
- Look for potential certifications in your area of expertise or interest to obtain and market them to obtain more clients for your side hustle
- Create “how to” videos for video streaming sites like YouTube and make money from the ad income
With the growth of the internet and the upward trend of innovative technology, the options are limitless on how you can monetize your expertise and interests.
What to Do with Your Side Hustle Money
The plan is to increase your retirement income, or accelerate your path to early retirement. Now that you have some extra cash coming in each month, how do you best maximize that extra money? Any way in which we can turn $1 into $2, $3 and more, is a great starting point. Consider these options to begin:
- Invest your side hustle money in the stock market (learn more from our post on “How to Invest Side Hustle Money For Beginners”)
- Use part of your side hustle money to reinvest into your side hustle. This may include marketing to obtain more clients, creating products that can be resold over and over to generate passive income, or even hiring part time work to grow your side hustle business.
- Invest part of it in obtaining more expertise and knowledge through certifications that will make your skills more marketable and give you the ability to charge more for your services.
It’s not uncommon to start a side hustle that turns into a full-time job, and then into a growing company that sells for a large amount of money. The best part is, the decision on how you grow your side hustle business is entirely up to you, and the potential to achieve a healthy retirement from side hustle jobs is unlimited.