Business Ideas for Retirees: How to Earn Extra Income in Retirement
Running a business in retirement
Collecting Social Security and running a small business can go together. Once you reach full retirement age, there’s no limit on how much you can earn without affecting your benefits. Before that age, the Social Security earnings test applies. Either way, self-employment income comes with self-employment tax, so it pays to know the rules before you start.
Business ideas for retirees
Consulting in your field
Decades of experience are something people will pay for. A retired accountant can help small business owners organize their books. A former contractor can advise homeowners on renovations, and an HR manager can coach job seekers for interviews. You don’t need an office or expensive equipment. A phone, a laptop and a few referrals are enough to get started.
Tutoring and teaching
Test prep, math for middle schoolers, Spanish for adults or a sewing class at the local community center. You can teach in person or online and set your own schedule. Many retirees start with a handful of students from neighbors and church groups and grow from there.
Crafts and handmade goods
Wooden toys, pottery, quilts and jewelry sell well at craft fairs, farmers markets and on online marketplaces. Holiday markets in particular can bring in a big share of the year’s sales in a few weekends.
Tour guiding
If you know your town’s history or the places visitors usually miss, walking tours can fill a few hours a week. Some cities require a license for paid tour guides, so check with your city before you take bookings.
Pet sitting and local services
Dog walking, pet sitting while owners travel, yard work or running errands for neighbors who can’t easily get around. Startup costs are close to zero and demand exists in every community. Local Facebook groups and Nextdoor are good places to find your first clients.
Renting out property
Renting out a house, condo or vacation home is usually reported on Schedule E as rental income. Rental income is generally not subject to self-employment tax. If you own property you don’t use, it can be the least time-consuming income on this list.
How to get started
Most retirees start as sole proprietors. You don’t need to register with the IRS to begin, but your city or county may require a business license, and some activities need a state permit. If you want to separate personal and business liability, compare the options in our guide to LLC vs. sole proprietorship vs. S-Corp.
Social Security and self-employment income
If you are under full retirement age, Social Security withholds $1 in benefits for every $2 you earn above the annual limit. In the calendar year you reach full retirement age, a higher limit applies and only $1 for every $3 is withheld. For self-employed people, net earnings from self-employment count toward the limit. Benefits withheld under the earnings test aren’t lost: when you reach full retirement age, Social Security recalculates your monthly benefit to credit them back.
Once you reach full retirement age, the earnings test no longer applies. You can earn as much as you like without any reduction in benefits.
Annual earnings test limits: $24,480 in 2026 and $25,560 in 2027 if you are under full retirement age all year. In the year you reach full retirement age, the limit is $65,160 in 2026 and $67,920 in 2027, counting only earnings before the month you reach that age.
Example
Linda is 64 and started collecting Social Security in 2026. Her tutoring business earns $30,000 in net profit that year. That’s $5,520 above the $24,480 limit, so Social Security withholds $2,760 of her 2026 benefits. The withheld amount is credited back when she reaches full retirement age.
Self-employment tax still applies
If your net earnings from self-employment are $400 or more in a year, you owe self-employment tax of 15.3% (12.4% Social Security plus 2.9% Medicare). This applies no matter how old you are and even if you already collect Social Security or Medicare. You also pay regular income tax on your profit. How to calculate and pay it is explained in our guide to self-employment tax.
Can I collect Social Security and run a business at the same time?
Yes. After full retirement age there is no earnings limit. Before that age, Social Security withholds part of your benefits if your earnings exceed the annual limit, which is $24,480 in 2026.
Do retirees have to pay self-employment tax?
Yes. If your net earnings from self-employment are $400 or more in a year, you owe self-employment tax of 15.3%, regardless of your age or whether you collect Social Security.
Is money withheld under the earnings test lost?
No. When you reach full retirement age, Social Security recalculates your monthly benefit to account for the months in which benefits were withheld.
Do I need an LLC to start a business in retirement?
No. You can operate as a sole proprietor. An LLC separates your personal assets from business liabilities, but it does not change self-employment tax by default.
Is rental income subject to self-employment tax?
Generally no. Rental income from property is usually reported on Schedule E and is not subject to self-employment tax.
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