Are you driving for Uber or Lyft to pay for vacations or other fun stuff, or is rideshare your opportunity to save, invest, and plan for retirement? While there’s no wrong way to spend your rideshare income, some drivers are using rideshare to bankroll their retirement. RSG contributor Tyler Philbrook shares how drivers are using their money and what their retirement plans post-rideshare look like.
Regardless if we are just getting into our working years, or we have been at it for decades, it’s never too late (or early!) to start thinking about retirement.
While many rideshare drivers are just trying to pay bills and keep a handle on driver expenses, even setting aside a few bucks a month can pay off big come retirement time.
Every single dollar you put towards retirement is money that will pay you back in dividends, depending on how you invest.
How can rideshare driving help you retire? Let’s find out.
Invest Your Money
When we talk about investing your money, we mean investing it into the stock market. Now there are 3 main ways to do this.
First, use tax advantage accounts such as 401k and Roth IRA. Each of these have different benefits, such as you can put more in a 401k than in a Roth each year.
Also, the 401k lowers your current taxable income, but will tax you when you withdraw the money. On the other side, the Roth IRA will tax you now on the investment, but when you withdraw the money, it’s tax-free.
A second way to invest is what’s called dividend investing. This happens to be my favorite way to invest!
Essentially you buy stocks that have consistently paid out dividends over long periods of time. You can set up the dividends to go directly back into the stock, or to go to your brokerage account so you can spend the money, or decide to purchase a different stock with the money.
While you’re growing, I recommend you continue to at least put the income back into the investment, whether directly into the stock you first purchased, or to get another dividend stock. I’m not the only one investing, either, as drivers below shared:
Finally, there is investing in index funds. While less exciting, as it isn’t a make money overnight thing, it is practical. With index funds, it’s simply put the money in, then forget about it until it’s time to retire.
Index funds are a great way to invest and have far more money at the end than what you started with, and they’re by far the simplest way to go.
Live Off Uber, Save Other Job
This one could be more tricky, and would take up a lot of your time, but in the long run could have massive benefits.
The concept is to live off one income, while making the same or less with another income and paying all your bills with that. If you have another job and are able to save all of the money from that job, how soon until you can retire? I would imagine it would be very quickly, maybe less than a decade.
One person I know bought a house and rented out all the rooms in the house. This made him enough money to pay all of his bills, enabling him to save all the money from his full time job.
Maybe you don’t have a house where you can rent all the rooms out (or maybe you have people, like a spouse and/or kids, who would object to living with strangers), but can you drive enough Uber on nights and weekends to cover your bills? If you can, then you can go a long way to retiring.
You might have to do this in reverse. Instead of living off your rideshare income and saving your other job income, live off your main job income and invest 100% of your rideshare income.
Buy Rental Properties
One of my blogging heroes, Paula Pant at Afford Anything, was able to retire early by purchasing rental properties.
As a rideshare driver, you have to decide what to do with the income you make, and one thing you can do is start your rental empire with your income.
It will take time, but one option is to drive for one year, saving every penny you make. After that year, take the money and use it as a downpayment for a duplex or triplex.
Live in one apartment and rent the others out. If you shop around and do it right, it’s possible you’ll get enough in rent to cover your monthly mortgage, meaning you now live rent and mortgage free.
Note: This could be more difficult in high cost-of-living cities, so you may consider buying a duplex or triplex in a cheaper area and renting the full building out.
What could you do if you didn’t have to pay rent or mortgage? The average rent in the United States in January 2020 was $1,464. If you saved that amount of money for a year you’d have over $17,000 saved up. You could then take that money and invest, or you could put it towards your next property.
And if you really wanted to grow your real estate portfolio even faster, you could spend another year saving up money while rideshare driving. Do that for a few years and you could have enough rentals that, like Paula, you could retire early.
Start A Business
Businesses are not as they once were. In the past, if you started a business, it meant you had some sort of store front, office building, and had to be physically present in order to make money.
Now, however, you can easily start a blog, Amazon FBA, freelance, or any other kind of business you can think of. Technically even rideshare driving is a business! In fact, we even have an article on how to make $1000 fast!
Even though businesses are no longer location specific, they do require you to have funds to start. A blog, though inexpensive to start, does take some money. Also, when you start one, it can be months, a year, or even longer before you start getting money back from it.
You have to have something that provides income while you grow that business. Rideshare driving can allow you to do that.
The same is true with the other businesses mentioned. Once those businesses grow to a point where you no longer need to drive to supplement your income, you can switch over to that full time. Or you can continue to run the business, putting all that money into retirement accounts and live off your rideshare income.
Uber For Your Retirement Job
A friend of mine was let go from his job, but he wasn’t old enough to collect retirement. Instead, he started driving for Lyft as his “semi-retired” job.
You may be in a situation where you have enough saved to retire, but due to your age you can’t access that money for a few years. Do you have enough savings on hand, or can you simplify enough that all you need to do is work part time rideshare driving until those accounts kick in?
There’s a reason why we list rideshare driving as one of the best part time jobs for retirees – it’s easy to get started, doesn’t require much if any stair climbing, and is flexible enough to allow semi-retired people to set their own schedule.
Move To Another Country
Some people may find this to be extreme, but it is a great way for your money to go further, and in some cases, much further!
Countries such as Costa Rica, Panama, Mexico, and many more can allow you to live a good if not a better lifestyle than you’re currently living for much less than you’re currently spending.
You’d have to have savings, investments, a business, or one of the other ways we’ve already talked about to retire using rideshare driving in place before moving. But if you want to retire sooner rather than later, this can be a solid option to help you do just that.
One word of caution here, do your research and visit first before making a major move! The truth is, moving to another country won’t be for everyone.
For people who write articles and create website about “being ex-pats”, moving could be great for them! They could be happier than they’ve ever been, living the life of their dreams. But are those your dreams? Make sure you know for sure before you sell all your possessions and move.
For this plan to work, you’ll want to drive for rideshare, save up as much as you can, and then make your move once you’re ready. You may choose to live off your 401(k) from your regular job, and use your rideshare income to make the move itself.
However, once you get to your retirement country, just know you might not be able to drive rideshare at all due to local laws, driving restrictions, etc. So save up before making this retirement decision!
Bad Retirement Plans
When we asked our audience about their retirement plans, we also came across some ideas. Some of them are obvious, where others need a little discussion.
First, the obviously bad ones. Please do not plan on winning the lottery, going to prison, or working until you die, unless you want to work until you die.
Now that those are out of the way, let’s look at other plans some people have that they should probably not rely on.
Some people have no retirement money saved, nor do they intend to. Their plan is to collect Social Security and pay their bills.
There are a few things wrong with that, especially if you’re on the younger side, including: that money is likely not going to be enough to cover your expenses, and it may not be there by the time you’re old enough to collect.
Others plan on relying on family to take care of them as they age. Though it’s true family should help you as much as they can, do you really want to put that much stress on them? Your kids may have kids of their own, which is stressful enough, or have other debts or priorities they have to focus on.
The last thing you want to do in your older age is ruin family relationships, so have a thorough discussion with your family about your expectations before showing up on their doorstep with your bags packed, ready to move in.
Summary
While using your rideshare income to pay for vacations, clothes, or other fun hobbies is an enjoyable way to spend your hard-earned money, you may want to consider what your retirement could look like.
If you’re at all concerned about your retirement plans, you may want to put aside some of your rideshare earnings for investments, including index funds, rental properties, or a profitable business idea.
On the other hand, you may decide Uber is the perfect way to earn extra money in retirement – not everyone wants to “fully retire”, and many people find money-making on its own to be an enjoyable hobby. Driving rideshare in your semi-retirement is a great way to stay active (chatting with passengers!) and earn extra money.
Still others may choose to see their money go further by retiring to a far-flung destination, or living with or near children to help raise grandchildren. How you choose to approach retirement is a personal choice, but rideshare driving can unequivocally help you reach any goal by providing you with extra income.
What are your retirement plans for the future or, if you’re already retired, what made you want to drive for rideshare?
-Tyler @ RSG
