As the landscape of work continues to evolve, the traditional nine-to-five job is becoming less common. Many are exploring alternative ways to achieve financial stability and personal fulfilment.
If you have interests and experiences that you’d like to turn into an income, a portfolio career could be the answer. This is particularly appealing for those over 50 who wish to diversify their work life beyond traditional employment. Or indeed, for those who don’t feel ready to retire fully yet. It’s likely a portfolio career will become more popular with increasing life expectancies and the growing possibility of a 100-year life.
What is a portfolio career?
A portfolio career involves multiple jobs or income streams. You may envision a middle manager turned consultant, who might also engage in Non-Executive Director roles and teach or coach on the side. This traditional view often limits the potential of what a portfolio career can be. Others may see it as a way to maintain a full or part-time job while pursuing contract work, passion projects, or hobbies. You might also think of it as a way to transition into retirement.
However, I encourage you to think more expansively about what a portfolio career can be. It can be a rich tapestry of experiences that reflect your interests, skills, and aspirations. And I know, because at 63, I’m busier, with more varied and interesting roles than I ever thought possible.
How I structure my portfolio career and finances
My portfolio career includes many different things from running an online business to podcasting. For example, last night, I delivered a paid one-hour workshop on achieving media awareness for your brand. Earlier in the day, I recorded my weekly podcast, Sex Advice for Seniors, providing another layer of income. After recording, I followed up on emails and processed orders for a client. I also worked on my business Startup School for Seniors - the online programme for over 50s I co-founded. And amidst all this, I managed an Airbnb changeover.
A portfolio career can include a wide range of activities and varying degrees of income. For example, working for clients enables me to earn a small base salary, plus commission on sales. I balance this with a passive revenue stream from renting a room on Airbnb. I run my workshops as needed while earning a more stable income through running Startup School for Seniors.
Whether you’re approaching retirement or are already retirement age, a portfolio career is possible for you to maintain. How you structure your finances will vary, especially if you choose to continue paying into your pension vs. if you decide to start withdrawing. Let’s go into a bit more detail.
Portfolio careers and continuing to pay into your pension
The flexibility of a portfolio career has many benefits. You can pivot when new opportunities arise which can help you better manage your finances as you approach retirement. By creating multiple income streams, you can delay drawing down on your pension and keep contributing. This means you can leave it invested with the opportunity to continue growing while you continue to earn and live off other streams of income. By leaving your money invested in a pension for longer, you’re potentially enhancing your retirement funds for the future.
Staying on top of your finances - both short and long term - is important here. How much or how little do you need to earn to meet your overheads? Some of my work, for example, is on a retainer while project based work is more difficult to anticipate. It’s important to keep track of jobs and the income you make closely so you can identify how much money is coming in and when. You may find that one aspect of your portfolio career generates more income for you within a short space of time. While another job might provide a steadier income over a longer period of time.
It’s also worth considering which income stream you use and what you spend that money on - for example to pay bills, as disposable income or to put into savings and investments. You might consider putting money into long-term savings such as your pension on a regular basis from a more stable income stream. This way you can keep up with making regular payments. For example, if you run your own business, you can make contributions from your limited company into your pension. There are tax advantages here too. Pension contributions can be treated as an allowable business expense. This means they can be offset against your business’s corporation tax bill.
Portfolio careers and withdrawing from your pension
Managing a portfolio career and transitioning into retirement is also possible. It can reduce the financial pressure to rely solely on your retirement savings. You could keep working and have a few income streams while enjoying a more flexible retirement. If you do start drawing down from your pension (currently you’re able to do this from age 55 rising to 57 from 2028) while you continue working, there are a few things to be aware of:
Your annual allowance will change - the annual allowance is a limit on how much you’re able to contribute to a pension per year. Currently, this is the lower of 100% of your salary or £60,000 (2024/25). Once you start withdrawing from your pension, the money purchase annual allowance (MPAA) kicks in. This means the amount you’re able to contribute to your pension while still claiming tax relief is reduced to £10,000 (2024/25).
Only 25% of your pension pot can be taken tax-free - if you have a defined contribution pension, you can withdraw the first 25% as a tax-free lump sum. You don’t have to take your full tax-free amount in one go. You could choose to take 10% tax-free and 10% as taxable income if you wish. Doing so could help you manage your finances in retirement. PensionBee’s YouTube channel has a video all about accessing and managing your money in retirement.
Consider other savings and investments - before withdrawing from your pension. If you have money in an Individual Savings Account (ISA) for example, withdrawals are tax-free. So you might want to leave your pension invested for longer while taking money out of your ISA first.
The benefit of having a portfolio career is that it offers flexibility. It encourages you to embrace your varied skills and passions and develop a career that’s uniquely yours. Whether you’re starting fresh or transitioning from a more conventional job, it’s well worth exploring what a portfolio career can offer you.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Suzanne Noble is a serial entrepreneur and the Co-Founder of the award-winning Startup School for Seniors, an online programme that supports over 50s to turn an idea into a business or grow their existing business’s trading income. Featured on BBC News, the Telegraph, the Times, Buzzfeed, amongst others, Suzanne wants to support those over 50 to manifest the life they desire.
