A long running theme here has been the need to be innovative in terms of cobbling together multiple streams of income in retirement. I've been writing about this for years and while this is difficult for some folks to envision I think more people will figure this out because they will have to.
This leads to an article from Yahoo about shadow economy employment. It starts with a profile of a 61 year old woman from Chicago who lost her job so she started to sell stuff via a perpetual garage sale of sorts and she makes money walking neighborhood kids to the bus stop (and presumably walking them back home after school but the article didn't specify). It appears as though this is enough income for her to keep her house.
As part of our potential shadow employment my wife and I face a perpetual yard sale ourselves as the show American Pickers is bound to find their way to my inlaws' house. We'll have to split with my wife's siblings but with the number of "I paid $5 for this box of junk and there was a $200 lighter in there" stories I've heard over the years it could be real money. My hunch is that this is many years down the road but my inlaws' commitment to their picking helps us understand the magnitude of the task and although the details maybe different than other forms of estate planning, this is their estate.
Without knowing too much about the Chicago woman's numbers it seems like her income from her shadow employment would be pretty low but if it is enough to keep her current on her mortgage then obviously the dollars, whatever they are, make a meaningful impact on her life. This is a great real world example of the need to live below your means. Not only does this make retirement easier it helps absorb the financial shock of being unemployed or under employed.
A part time $1000/month job looks pretty good versus a $3000 or $4000 lifestyle and that is not absurdly unrealistic to find. Against a $10,000 nut, $1000 might look pretty depressing (unless there is $5 million in the brokerage account).
For anyone new, I think it is important to mention that I walk the walk on this sort of back up plan/post retirement career concept. But it is very important to love the work. My involvement with firefighting predates the blog and when I started thinking about this stuff (I joined the FD in 2003). I have been very lucky with how my career has played out but as someone who feels they have been lucky in his career then there must exist the possibility of becoming unlucky. I don't know if I could replace my income but it would not be very difficult to replace our expenses.
A recent addition to how I write about this theme is the idea that when/if forced, people will figure out how to make due. I don't think I've ever referred to it as shadow employment but for many people that is what they will do to make up any difference between Social Security, their portfolio and their expenses. This would probably be more along the lines of monetizing a hobby, being a handy man of some sort or selling stuff on eBay versus something where you receive a W-2.
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7 comments:
Every time I catch Mr. Nusbaum addressing the beneits of multiple income streams and living beneath one's means I feel compelled to endorse this concept.
There is no better feeling after age sixty than not having to worry about one pension or a brokerage accout blowing up and sending one to the proverbial poor house. There is joy about remaining productive in areas of interest and knowing you are not likely to be a burden upon your children.
Striking a successful balance between maintaining multiple income streams, fulfilling family dreams and obligations, having fun, goofing off and volunteering to make a difference is not difficult to accomplish.
My casual observation to this scheme, apart from the financial benefit, is that it keeps you feeling young, alert and out of the doctor's office.
T
thanks T, I write about it but more importantly you are actually living it.
I do agree with it as a back up plan and I plan on keeping my engineering license so I can work part time if required.
But I would much prefer to invest wisely and create a portfolio to keep me in my motor home as long as feasible.
Roger, do you think most people who do stuff like walk kids to school, part-time handy-man, your backhoe neighbor, etc. report their earnings and pay taxes? If not, I see a potential for tax problems for themselves or their heirs who inherit this untaxed ("dirty" if you are a Russian sending your cash to Cyprus) money.
9:57,
The article implies that most people working in shadow jobs don't report the income.
Anon 9:57 again. Thanks for the response. The underground economy can be enticing, but I think potentially problematic. About 30 years ago, my wife was in charge of getting a band for her college's graduation entertainment, and she came to me with a question. She said the band leader quoted a charge for the band of $450 if she paid with cash or $600 if she paid with a check. What should she do? I recommended she pay the $600 via check, which she did.
Have you tried picking up aluminum cans by the roadside?
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