Are you retired or planning to retire soon? Do you have a unique skill set or hobby that sets you apart from the crowd?
If so, then you may be in a good position to turn your hobbies into income during retirement. From painting to fishing, crafts, interior design, sewing, woodworking, and more, there are countless ways to earn some extra income, remain productive, and do what you love – all at the same time.
Below, I’ll outline some simple steps you can take to use your pastimes to earn money, explain some of the pros and cons, and answer a few common questions.
Pros and cons of monetizing your hobbies
Around 28 per cent of Canadians between 55 and 64 stated that they plan to continue working even past retirement to be able to afford their cost of living, according to a 2024 survey by the Healthcare of Ontario Pension Plan (HOOPP).
But why work a traditional job when you can earn a living from your hobbies?
Monetizing your hobbies and favourite pastimes can be an excellent way to earn some extra money, even after retiring from your full-time career. Here are some of the benefits:
- It will keep you from getting bored and give you something to do;
- It can give you a sense of purpose, which can help energize you;
- It’s a great way to set aside extra money for vacations or the holidays;
- It’s a chance to take a leap of faith and start the business you’ve always wanted to try
A word of caution, though. There can be some downsides to turning your hobbies into an income source:
- Your hobby can begin to feel like a job and you may not enjoy it as much;
- You may have to deal with problematic customers from time to time;
- You may experience some financial setbacks, especially if you try to turn it into a full-time business
Overall, though, monetizing your hobby can be a very rewarding experience. The important thing is to remember to have fun with it and not let it become a source of stress.
How to turn hobbies into income
Curious about how to turn your hobbies into extra income? Here are a few simple steps you can take to get started.
Step 1: Figure out what you’re good at
First things first, you need to figure out what you’re good at. The thing about being a hobbyist is that it’s easy to write yourself off as ‘not that good’ at something that you may actually be really talented at.
Here’s where it can be a good idea to get an outside opinion. Ask friends and family members what they think you’re really good at, as they may better see where your true talent lies and may also be able to give you some good ideas.
Step 2: Research the market
Next, you’re going to spend a little bit of time researching. Take some time to go online and watch videos of other people who are doing the same thing you’re doing. If you live in an active community, spend time attending events or meet-ups within your niche.
This will give you a better idea of how you’ll be spending your days and what you need to do to gain the attention of potential clients and customers.
Step 3: Decide on how you want to deliver
Once you’ve come up with your idea and you know what you want to do, it’s time to decide how you want to deliver your product or service. There are two main avenues you’ll be able to take:
- Selling online
- Delivering products and services in person
If you’re an artist or you make consumable goods, selling online through platforms like Etsy or Facebook Marketplace is an excellent way to get started. You may also bring your goods to local farmers’ markets and trade shows or register to become a vendor at local events in your town/city.
If you’re delivering an in-person service, such as being a fishing/tour guide or offering workshops and classes, social media is still an excellent way to promote and market your services.
Step 4: Take small, consistent steps
One important word of caution I’d encourage every retiree to follow is this: don’t pour all of your retirement savings into your business. Instead, start small. That way, if things don’t go as planned, you don’t find yourself financially challenged or struggling to make ends meet.
Start by crafting your first few pieces, hosting your first workshop in your home garage, or participating in a local show. Once you start to gain some traction in your community, you can take some of your new income and put it towards growing further.
Understanding your tax liabilities
If you begin earning income from your hobby, you will be required to claim your earnings on your annual tax returns. Depending on how much extra you earn, this could affect your tax bracket and result in you paying more taxes.
This is one reason why it’s important to set some of your income aside, in case you need to devote some to taxes.
Do you need a business licence?
If you’re just starting out as a hobbyist, you likely don’t need to jump straight into officializing your business.
However, if you plan to start earning regular income and making sales past a certain amount, you might need to register with your provincial authorities so you can collect sales tax (goods and services tax or GST). This will also allow you to claim business deductions on your tax return, which can help you reduce your tax liability and pay less taxes.
Do you need a business bank account?
Once you make your business official, it’s a good idea to open a separate business bank account. Only use this account for business purposes, as it will make it easy to track all of your income and outflow. This, in turn, will make it easier for you to file your taxes and track how profitable your business is.
The CRA offers excellent resources for those wishing to start their own businesses, which you can read here.
Every little bit helps
At the end of the day, turning your hobby into a source of retirement income can be a great way to set extra money aside and live a higher quality of life. Plus, it gives you something to do so you don’t find yourself bored.
More than anything, retirement provides the opportunity to finally try things that you may not have had time or resources for while working your full-time career.
Keep on reading for more tips on how to earn extra income during retirement.
Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on Blueprint Financial.
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