- 4-Minute Article
- Nov 14, 2018
How to Make a Passion Pay Off
Develop a plan to generate income from doing what you love.
Created in Collaboration with Kiplinger.
Doing what you love can be more than just a pleasant way to enjoy retirement. With some thoughtful planning, pursuing a passion might also generate extra income.
To help discover if what you love has income potential, keep these tips in mind.
When it comes to finding financial opportunities from a hobby, don’t limit the possibilities. Consider all the different ways to harness the skills and knowledge you’ve acquired from a passion.
Currently five to 10 years from retirement, Michael Grasso, an emergency medicine physician and assistant professor, is already exploring opportunities related to his long-time personal passion: playing jazz trumpet.
He’s looking forward to performing more gigs in retirement with his Washington-Baltimore-area music trio, the Not 2 Cool Jazz Band. At the same time, he also may consider several related pursuits, such as private music instruction or instrument repair. He’s even thought about developing a practice devoted to another professional interest: performing arts medicine, which treats the specific health issues of performing artists and instrumental musicians.
“Whatever I decide and however I make the transition,” Grasso, 58, says, “I do hope to have fun with it and let my lifelong love of music maybe take me in new or blended directions.”
To weigh possible opportunities, start with the two most important resources: time and money. Understand the scope of your passion – personal fulfillment versus a side business, for example – and what it might take to get there. Then, work with your financial advisor to answer these types of questions:
- How much time will it take to make my passion turn a profit?
Note: Time to profitability varies, but a recent survey of 500 small business owners found that 84% reached profitability within the first four years of business, with a significant portion (68%) attaining profitability in the first year.1
- Estimate your answer with this resource from the Small Business Administration (SBA) and a profit-and-loss projection template from SCORE, the SBA-backed small business mentoring and education association.
- How will devoting that amount of time to my passion affect my other retirement plans?
- Will it add or subtract from the enjoyment of that activity?
- What kind of financial investment will be needed to launch a plan? Are there tax considerations? What changes, if any, will I need to make to my financial plan?
Next, it’s important to get a deeper understanding of what to expect in terms of earning potential and competition.
As a starting point, check the Bureau of Labor Statistics’ section on self-employment for retirees, which offers useful facts about turning many common hobbies into part-time work opportunities. This resource also includes median pay and job outlook by state or region for each field listed – a good guide on which to base your plans.
There are also resources specifically geared to help the growing number of adults age 50 and over with entrepreneurial interests. Adults age 55 to 64, in fact, now represent 26% of all new entrepreneurs, up from 15% a decade ago.2 The learning section of the Small Business Administration’s (SBA) website offers Encore Entrepreneur, free online coursework designed for individuals who plan to start a business after retiring from careers. There are also free courses specifically created for women.
Tapping SBA resources was one avenue that helped Angie Higa, 58, turn her love for sewing into a source of income after she retired from a nearly 30-year banking career in Hawaii.
An avid seamstress and designer, she grew up sewing her own clothes and continued the craft as a mother of two daughters. “My mantra in life was ‘if I can't find it, I'll make it,’” she says. That motto led to a new business idea during a chilly flight to the mainland – after some airlines stopped providing complimentary inflight blankets and pillows to passengers. Higa created a travel blanket that folds into a tote bag with a matching neck or lumbar pillow.
“After showing a former bank client what I was doing in retirement, she asked if I could make 10 for her to give as client gifts,” Higa recalls. Word spread and within weeks, she had more than $1,000 in orders. Armed with that healthy demand and some valuable advice from the SBA and local Small Business Development Center, her hobby took flight as Sky Dreams LLC in 2009.
“Anyone can turn their passion to profits,” she says.
As Higa’s experience shows, strong business ideas often reside at the intersection of personal passions and market needs. No matter what goods or services you hope to establish, develop a solid plan and prepare for the challenge by testing the marketplace and researching your passion from a business perspective.
Gather information, attend conferences, and get involved in groups or associations that serve the industry. Get feedback from other retirees who took similar routes; they may offer friendly advice about reaching customers – and tips to successfully mix a profit-making venture with retirement.
Share your plans with your financial professional. The key is to ensure that new goals for the future don’t interfere with your retirement plans. That will allow you to grow your passion while also protecting your long-term financial security.