I'm a financial advisor — here's the biggest factor that can make or break your retirement
This is an as-told-to essay based on a conversation with Andrew Crowell, the vice chairman of wealth and a financial advisor at DA Davidson. Crowell is based in Southern California and has almost 30 years of experience in the financial services industry. His words have been edited for length and clarity.
Over the course of my career, I've realized that what retirement looks like today is really different from what it was when I first started. Back then, people followed the traditional path of working at a company or a couple of companies for a long period of time, retiring eventually at 65 and then spending their time traveling, playing golf, and going on vacations.
As time has passed and we're living longer, people are having a much more active retirement.
I have seen successful retirements and less successful ones. The successful ones are when people are planning to retire to something, an activity, a set of priorities: "I'm going to be the babysitter to my grandchildren two days a week," or "I'm going to continue with my pottery class." They have a schedule that they're looking forward to continuing on the other side of work.
The unsuccessful ones often are the result of retiring from a job, but not retiring to an activity or a schedule or something of purpose.
People who are retiring need to plan ahead for how they'll fill those hours in those days because it is a lot of time.
Consider a retirement side hustle
The definition of — and classic timeline for — retirement is changing. While many retirees might picture never working again, a side gig in retirement can be a fun and meaningful way to stay engaged in the community while supporting a more ideal retirement overall.
I have four or five clients who have active retirement side gigs. One client, a freelance writer, turned her volunteer role into a paid position. Another one of my clients has always loved knitting. She's part of a group that meets monthly to knit sweaters and scarves, and she realized, "Oh, this can be an Etsy business."
At the last conference I attended, both of my Uber drivers were retirees. I asked one, "Why are you doing this?" And he said, "Oh, it gets me out of the house, it's flexible hours, and I can earn a little extra income."
One reason for this trend is inflation. A side hustle allows people to have another stream of income in retirement, other than just Social Security or living off their savings.
But at the same time, people are living longer and searching for meaning in life, and I think that's another reason that people are looking to do something that brings fulfillment. My knitting client began knitting sweaters and scarves for those affected by the Altadena wildfires, so her side hustle brought a sense of purpose, not just cash flow.
There are also health benefits to a side hustle. There have been numerous studies that show that people who are not engaged in meaningful activities cognitively in retirement suffer ill health effects because they just haven't been actively using their mind.
How to get a side gig in retirement
When it comes to side gigs, it's a real opportunity for advisors to help clients think a little more out of the box than they traditionally do.
If you retire tomorrow, you may think, "Well, I don't really have a hobby that lends itself to an Etsy business."
My freelance writer client had spent her career in PR and marketing. She had also volunteered on the board of directors of an assisted living facility.
I asked her, "Are you still doing that? Do they have anybody on staff who does marketing and communications?" And she said, "Nope, I've been doing it pro bono for 10 years now."
I suggested she approach them and ask to be paid part-time, and lo and behold, it turned into a couple of thousand dollars a month side gig for her. It was simply me prompting the questions of "What are you involved in?" and "Why are you involved in that?" You don't have to change anything you're doing, but your role could change from pro bono volunteer to part-time employment.
A lot of exploration conversations with clients have surfaced these ideas that people weren't thinking about earlier. We have direct communication capabilities today that didn't exist 30 years ago, and those are opening up doors to possible businesses for people.
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