Funding Your Retirement with Your Creative Work

Photo: Lucy Boynton

One of the big things I took away from Dan Gilbert's book Stumbling on Happiness is how having control over your activities is one of the main keys to happiness. Having the tiniest bit of control over their day-to-day routine was enough to keep a group of seniors in a nursing home alive. Though less dramatic, I think lots of people's experience in hobbies and their professional lives bears this trend out.

When most people pick up a hobby, it's 100% within their control. Thus, it's not surprising that those activities are enjoyable and make you happy. If you're painting, you can paint whatever you feel like. If you write short stories about vampire leprechauns driving taxicabs, there's no one to tell you you can't. And, if you want to post on your site or podcast about the sleep cycles of Bolivian gerbils, no problem. Aside from being able to afford supplies and the time to participate, hobby activities have effectively no restrictions on them.

The enjoyment of hobby activities leads lots of people to have the following thought:

"I enjoy this a lot more than my day job. Imagine how great life would be if I did this *as* my day job."

I know that this thought goes through a LOT of heads because I've had it and I've talked to lots of people who've also had it. The problem is that this is an example of where our intuition about what will make us happy usually fails.

That's because a large part of what makes our day jobs less fun than our hobbies (and what justifies us getting paid) is the fact that there's an outside constraint on the activity. That constraint can be as obvious as a boss telling you what to do or as subtle as having to cater to marketplace demands instead of your own creative whims.

Regardless, when you take a hobby and turn it into a day job, you run the risk of discovering how much joy can be drained out of the activity when paying your mortgage depends on it.

Now, I'm not saying you CAN'T turn your hobby into a day job and end up with a dream job, there's plenty of info out there on how to take a stab at that. I'd like to present a different path for building on your hobbies. It just happens to be the one I'm pursuing.

Dave Slusher has touched on this with regard to his podcast. He knows (as I do) that as a software developer who enjoys his job:

1. Even most "successful" podcasters don't make as much as software developers.
2. That he would have to stop doing it on his terms in order to make a living at the podcast.

There are many things I enjoy doing and would like to do more of. However, for example, the average published novel in the United States makes its author $3000. Why on earth would I aim to quit my profession to write novels, unless I could be certain that I would end up on the best sellers' list? And the odds of that happening for a first time novelist are *literally* the same as many lottery games.

However, all of this doesn't mean that I don't think monetizing your hobby is a bad idea. Far from it. It's just that if you shift your perspective on that monetization, you can keep 100% of the joy in your hobby and still leverage it for your long term financial goals.

Let's go back to the idea that much of our happiness comes from having the freedom to choose what we do with our time. Under that definition, "retirement" is pretty much about shifting the percentage of our time that's under our control. When we're young, most of us hand over control of about 40-50 hours per week of that time, with the rest under our control (to a point, of course). If we consider that 40 hours as having 0% under our control, then full retirement would represent 100% being under our control.

Note that I'm NOT defining retirement as "stopping working". Just as having 100% control over what you do. Consider how your day at your job might go if you knew for a fact that if they fired you, you could live exactly like you already do for 4 or 5 years without *any* job. You'd probably put up with a lot less crap, right?

To me, that's the goal of reaching retirement goals: having financial independence and freedom.

So, any and all methods of earning money for me are about either enjoying my non-working hours now or narrowing the gap between the 2 days + nights of freedom and 7 days + nights of freedom.

To that end, I've been recommending the following approach to monetizing a site or other hobby (in the United States. Adjust in rational ways outside the US):

• Take the first trickle of money and pay for your supplies: hosting, paint, film, etc.
• Take the next tier of money and put it all in an IRA. Because up to $5000 (if you're under 49 in 2008) can go in this plan, and it shelters all of that money from taxes, it's a really good way to avoid having to set up elaborate accounting to deal with your non-paycheck income. If you want the absolute minimum hassle, put *all* of the money in this direction.
  $5000 a year for 40 years at 10.5% interest (60 year average for stock market, including Great Depression), gives you $2 million.

• Do the same in an account for your spouse if they aren't taking advantage of an IRA.
• Build up your emergency fund. My appendectomy a couple of months ago is no big deal because of our emergency fund, despite high deductibles on our insurance.
• Pay off your debt. I'm aiming to be debt free except for the house by the end of 2008.

Basically, this whole approach lets you have complete control over your creative endeavors, even while you pursue monetization. However, rather than trying to squeeze $50,000+ out of your hobby, you turn the $5000 a year it might quite reasonably support (this site brings in about half of that right now from the ads) into a stable retirement. And, if you're already saving for retirement, you push the timeline closer.

I personally intend to "work" as long as I can. However, I guarantee that I'll get increasingly picky about my projects and tend more toward the stuff I feel like doing on the time tables I feel like doing as I narrow that gap. And, my creative work is furthering that.