June 11, 2014

Starting a Small Business or Generating Income: Ideas?

I received an email from Dave, a reader in Oregon, who asked me to address a question that concerns him and many others. Here is a portion of his note:

My situation is that I’ll retire in just over 12 months and two weeks….June 30, 2015.  Yes I count the weeks!  Finances and health insurance are the gorilla issues for me, so ideas on a part time business venture (vs just getting a hourly wage job) would be of interest.
This is of keen interest because at 63 I’ll be paying for family health insurance coverage (I have two twenty something children on my policy so pay family rates).  The “bronze” group health premium is $14,400 per year (probably higher in a year when I begin paying 100%). 
 If I’m self-employed or a small businessman these expenses are fully deductible.  As a simple retiree, I would have much less tax benefit (deductible after 10% of AGI…and not counting Obamacare tax credits based on income).
Anyway, I digress. I'd really like to hear from you and especially others about part time businesses that folk are using to bring in supplemental income and just fill up part of the day/week. For you, Bob, it was writing a book! 

Dave is right, there are lots of folks who are looking for ideas to generate extra cash to help with unexpected situations, to fund a special vacation trip, or simply to feel more comfortable about one's cash flow. The tax benefits can be enticing, even as a retired person.

As I have noted in other posts, I have been a travel guide in the Phoenix area, helping to transfer visiting business people here on conventions and incentive travel trips to various sightseeing spots, golf courses, and restaurants. The work is simple and pays rather well for part time work. I no longer do that type of work, but for almost five years it was a nice source of several hundred dollars a month. The only problem with this type of work is you have to live in one of the dozen or so cities in the U.S. that attract convention travel.

I have also used my writing to make extra money. Articles for PBS and other web sites, plus my two books, have generated enough to allow Betty and me a few extras in our retirement. Ads on the blog kick in a few hundred a year...enough for several nice dinners out!

Regular reader, Barbara (Zero to 60 and Beyond) sells her art work on the web, while I think RJ Walters still makes and sells wood furniture. Another Barbara sells quilts, while yet a third Barb (very popular name among my readers, apparently) makes extra spending money from her blog, Retire in Style.

So, for Dave, and everyone else who is anxious to find a way to put together a small business to generate some extra income and provide some tax advantages, here is your chance to tell us all what you do to add to your income. Any and all ideas are welcome.

Who knows, I may find an idea I love from your suggestions and run with it.

Note: I'm heading to Flagstaff for a long weekend in the RV. I will probably be slower in posting and responding to any comments from Thursday until Sunday evening.


  1. Once Dave turns 65 (he is now 63) he will no longer be able to get insurance for himself privately. He will automatically go on Medicare. His children will be in their mid-twenties and I think they can get great rates from ACA catastrophe category (and pay for it themselves). In the interim year, once Dave retires, not knowing his income, he probably would be eligible for the health subsidies.
    For my own personal slant on self-employment in my 60's, unless it's low overhead, I wouldn't venture doing it. I'd work for an employer instead. It's more difficult to recover from a business loss in your 60's and beyond if you have made a large investment into the business and you go belly up. Selling art work, furniture or quilts, investing other than basic supplies and labor would be a bit more my style. Many of my fellow retiree friends have taken part time jobs at Wal Mart, Lowe's, Home Depot, doctors office (answering phones, etc) and love it! They work a few hours per week, make enough extra money to happily tide them over and come home at the end of the day and enjoy life. No self-employment worries, taxes, expenses etc. etc.

  2. Before offering up any suggestions or possibilities, I would have to know Dave's particular talents/skills/interests as well as what city/town he's located in. There's tons of possibilities, but more background info is needed for meaningful input, in my opinion.

  3. I have a natural mathematical bent (Ph.D., physics) and got interested in stock market derivatives (options, etc.) as an intellectual interest. Have played with them and the results give me a nice financial supplement. Remember: a baseball player who bats .300 is an all star. I have many more losers than winners but the magnitude of the winners make up for the loses. But if you don't have the interest or the inclination, this isn't for you.

  4. I love seeing different perspectives. For example, unlike the poster above, I would NEVER work for anyone else again-and I say that as someone who does need income. There are many, many businesses that can be started up with minimal expense. Many home businesses can travel and are portable, which can be important, and a home business is done at exactly the hours you choose-often wearing what you choose.

    Without knowing Dave's experiences I would suggest that whether it is work or a business, he look at those areas he is skilled in, and those things he likes to do and think about how those two can
    become businesses. Can he be a consultant? Take on contract work from his old job? Can he teach? Can he make something and sell it?

    As some folks know I have moved beyond selling quilts. While I am not an organized person at home, I am great at "sorting" and weeding out the good from the bad. My second businesses is doing estate sale clean outs -I do them when I like, its generally no longer than a week each time, I have no overhead to speak of and if my business flops, I ve lost nothing.

  5. Dave should check out John Lee Dumas' daily podcast "Entrepreneur on Fire". There's a wealth of knowledge to be gained from the folks he interviews each day, all of whom have gone through the process of starting their own business.

  6. I agree with the first post. Unless a new bus, has low, low initial investment, the venture may be tough to recover IF it goes south. I invested in a small bus. that required a relatively small investment (20k). I got out quickly and ate the loss. At this point, it probably isn't worth it. Plus the costs for accounting etc in starting a new bus. may also be a drag. Keep in mind, as long as your paying all your own insurance, chances are you can write it off on your personal taxes. And soon you'll have Medicare. I have virtually no income and the Feds let you write off med expenses if more than 7.5% of income (I think). It helps keep your taxes low. I have similar expenses and use everything I can find. (Mileage, co-pays, premiums etc)

    1. I agree with the income. I pay my health insurance directly and so that and all of my opays allow me a large deduction each year. That said, Almost everyone I know (including everyone mentioned on here by Bob started their businesses with much, much less, and sometimes nothing.

      I encourage people who want to start a business to read the book "Hundred Dollar Startup". Said as I am sitting "working" on my patio with my feet up and a mimosa in hand.)

  7. Thanks for the shout out, Bob. I tried a few different ways to market my art, using my website, and ended up with Fine Art America. It doesn't generate much $$, but I don't promote it as much as I should. So, shame on me. Sometimes life gets in the way.

  8. Dave points out yet another unfair aspect to our tax system: Health insurance is tax deductible if you get it through work, but not if you just buy it yourself. I myself solved the problem by doing some consulting work for my old company, and for one or two other concerns, and then filing a Schedule C. This allows me to deduct medical insurance; allows me to keep contributing to my IRA and to postpone getting SS. Only bad thing: have to pay the full 15% in SS tax.

  9. I live in an age-restricted community and my neighbors and I always need odd-jobs done. Do you have handyman skills? Even a small clientele could keep you busy and could bring in a nice little income.

  10. Like Lester stated earlier, I also got into options trading over the last year+, primarily selling put options (and the corresponding covered call options if I had to buy the stock). Playing around only last year I made a decent chunk of change, and have amped it up since retiring a few months back. It is not for everyone and you need to not only educate yourself, but follow the market daily. But for those that have such an inclination, you can make good income without expending lots of time, or working for a boss that oftentimes knows less than you do about the business.

  11. Great topic - I am gingerly stepping into retirement in 16 days - but who's counting! I have considered temporary employment such as maternity leave cover-offs; supporting distance education (as that is my background) which would be totally at home on my own laptop; and, also, just keeping my ears open for opportunities working with aboriginal training programs. I dream about life coaching etc. but the investment in the education part is a little high for the potential return. To begin with, I will not work and then I will maybe volunteer at a college working with ESL students and then....well, I hope more people post on here so I can pick their brains too!

  12. Substitute teaching is not for everyone, but it gives me $600-800 a month. You don't need a teaching certificate, just a substitute license. I can select my jobs on line. They pay $100 a day.
    I like Barb's idea of setting up estate sales. I am thinking of opening a company that helps elderly move from their house to their new residence.

  13. Not sure what Dave's background is, but consulting might be an option. Here is a blog post I did recently on the subject. In addition to my own experience, it includes those of several friends. The good news is that it takes little or no money to get started.


    Hope this helps, and best wishes to Dave as he commences his retirement. May it be satisfying!

    PS - Have fun in Flagstaff. Feels like Flagstaff here in MN - high of 65 today --better than 108 in Phoenix :-)

  14. After retiring from owning a business and dealing with marketing, websites, staffing issues, management, and the co- boss (my husband..) I am breathing a sigh of relief.I think I would rather eat PBJ sandwiches for dinner than start a new business just now.Of course we're fresh into this retirement thing.. maybe in a few years, but the open road and the swimming holes hold much more appeal right now..

  15. Hi Bob, you asked us to share with everyone what we do to generate extra income. So here it is. Let me start by saying that “brands” can last a life time. For example Colgate Palmolive has been generating income for it’s owners for 208 years, that’s several life times. What if you could partner with a company and their brands and develop a lifelong income stream?

    That’s what I have done, I became an affiliate partner with a heath & wellness company that does all their own R&D and manufactures their own brands. They are not only in all 50 states, but are in 50+ other countries around the world as well.

    Becoming an affiliate opens up numerous tax deductions for you, one of which is travel. If you combine business with your travel you can deduct many of your expenses. Great for those who are retired and love to travel!

    Our products are made right here in the U.S and our retail store is the internet. Our business model is based on developing partnerships not selling. We are the advertising arm of the company. We simply share samples and information about products we love. Doing this creates a new weekly income stream. Our group focuses on and talks about building four key freedoms... Financial Freedom, Time Freedom, Geographic Freedom and Retirement Freedom.

    Our (Vemma) products are awesome and the only cost to get started is placing a personal monthly order. By doing this you are on a pathway to better health and you get a FREE personal website. You’ll love our products and naturally you’ll tell others about them...just like a great new restaurant or a new movie. And the way we do things, building a network is easy.

    There is No Front Loading or stocking products, No Deliveries, No Employees, No Time Clock to Punch, No Franchise Fees and No Long Term Commitments.

    Partnering with Vemma just makes sense.

    For more information call Duncan at 623-878-5980 or email me at dcpaisley@q.com
    My website address is: www.duncanpaisley.com

  16. After 34 yrs in the health care system, I don't want anything to do with it anymore. I'm content to do housework to pick up extra cash and tighten my belt vs going back to that system. It's interesting to see my son's generation work so frantically to make the money to buy the big homes that they then have no time to clean. Also, meal preparation for this same generation, all so busy working and running their kids to one event and another, only to spend more time in the fast food and take-out line ups. It blows my mind what they're willing to pay for this kind of work. Obviously they have more money than time. After 15 months of retirement, I don't know if I could punch the clock at a real job. I like the freedom of making my own flexible schedule.

  17. Sometimes a small job that generates extra cash is right under our noses. The accountant job (actually more akin to bookkeeping) opened in our Homeowner's Association, and I took it. It paid the amount of the monthly association fee, so was inflation proof. When the fee went up, so did my compensation. I had no overhead costs, and nothing stopped me from being away for recreational travel. My contract stipulated that I could appoint a representative to give monthly reports if I chose. We gained several hundred dollars a month for 10 years and had the added benefit of staying in touch with community events and working with a variety of new acquaintances.

  18. After rereading Dave's note above, especially after noting his twenty-something kids who are/will need to be on his health insurance policy, I wonder why they can't pitch in and pay for their fair share of the costs? They may be still in school (graduate work?), but part-time jobs while in school are nothing new or outlandish.

    On a related topic, when I left teaching, I tried subbing for a bit, but found it surprisingly less than satisfying. Personally, I am way tired of the rat race and am willing to sacrifice whatever in order not to have to jump back on the treadmill. I do some street performing (busking) at local farmers' markets in good weather (pays for filling up my gas tank, usually), but that is about as far as I wish to go in the work world. Has Dave looked into starting to collect SS sooner than later?

  19. I am not yet retired, but some options for Dave might be to look into seasonal work. Take a tax preparation course, cut lawns or do some simple hauling jobs. If he has a truck his overhead will be minimal. I've been investing in dividend paying stocks for the extras in retirement. Annually I should have enough for concerts, theater tickets and movies.

  20. I am not retired, but I can offer some insights from my own work work-from-home experiences. I have had young-adult novels published via the traditional publishing route, but the earnings of any but the top novelists are minimal. I, as do most novelists, also have sought other work. For the last twelve years, I have written educational articles for an options-trading publication. I would add a disclaimer to the comments from the two responses about trading options for a living: in my capacity writing for an options-trading website, I receive many heartbreaking letters from traders who did not practice the good loss management skills that the two previous traders must be practicing. These tearful and heartbreaking responses come from well-intentioned and bright people who have traded through ready cash, retirement funds, and, sometimes, the funds of family members. Educate yourself as your two previous respondents must have done and always practice sound trade management practices before considering trading for a living. We have been in a rising market situation since 2009, but someone entering the market now might find themselves in an entirely different market environment. Dave, with his mathematics and physics background, might consider writing test prep and other educational materials for educational publishers. As you can imagine, publishers find fewer would-be writers who can write educational materials for mathematics and the sciences. Although I have managed to capture assignments on reading comprehension and other language arts topics that I prefer, my own (lesser than Dave's) background in mathematics and physics means I'm more often assigned those topics. Benefits are that you can establish your own business entity, work from home, and accept or decline offers that might be made. Pay will of course be less than you would make pre-retirement, and it's a hurry-up-and-wait kind of business with tight deadlines when work is finally assigned. You frequently must write sample items to meet the publisher's specifications when applying for work, and you are unlikely to be paid for the time spent producing that material. Pay may be slow because publishers, developers and packagers sometimes have cash flow problems. Establishing steady work would require some lag time to build up clientele, so I would suggest learning about the business and beginning to send out resumes before retirement. However, if you aggressively look for work, meet deadlines, write engagingly and to specifications, you can find work with decent pay. Start with the blog, "Writing for the Education Market."