A boomer shares how Lyft driving has been a retirement hack — supplementing his income while allowing him to draw on his Social Security without penalty

Mark McCann says Lyft driving was a better fit for him in retirement than a traditional part-time job. Mark McCann

• Mark McCann, 64, began driving for Lyft when he retired from his 9-to-5 job in 2021.
• Business tax deductions have allowed him to draw on his Social Security while supplementing his income.
• Retirees should understand the tax implications when they enter the gig economy.

If Mark McCann only cared about making money, ride-hailing wouldn’t be his top choice.

“Truth is, it’s almost impossible to make a living due to car depreciation, gas, tolls, tires, and on and on,” the 64-year-old told Business Insider.

But for McCann, a part-time Lyft driver in Dallas, it’s not the income — but the expenses related to ride-hailing — that makes the gig a retirement hack.

McCann is among many Americans who have turned to Uber and Lyft driving during their retirements. Earning supplemental income, getting some social interaction, and avoiding boredom are among their primary motivations, drivers have told BI, but each has their own personal reasons for entering the gig economy.

Drivers can deduct business expenses to reduce their taxable incomes

When he retired from a 32-year career in sales, he had enough savings to cover his living expenses, he said. For entertainment expenses like travel and eating out, however, he planned to use income from a part-time job and draw on his Social Security benefits. Americans can begin claiming Social Security at age 62, though waiting until their full retirement age — 66 or 67 — increases the benefits one is entitled to.

But there was one challenge with this plan: If Americans draw on Social Security before their full retirement age, then there’s a limit to how high their taxable income can be before their Social Security benefits take a hit. The Social Security Administration says it will deduce $1 from benefit payments for every $2 one earns above the annual limit, which is $22,320 in 2024.

For McCann, the ideal job would maximize his income but keep it below the earnings limit. He said ride-hailing checked both boxes.

In 2022, he made roughly $29,000 driving for Lyft — which is the amount he earned after the company took its cut, according to documents viewed by Business Insider. However, drivers can deduct business expenses to reduce their taxable incomes. The most common way to do this is through mileage deductions, which, as of 2024, allow drivers to reduce their earnings by $0.67 cents per mile driven for business use.

In 2022, when the mileage deduction was $0.625, McCann drove roughly 32,660 miles for Lyft. After accounting for roughly $20,400 in deductions, his taxable income fell to about $9,000, according to BI’s calculations — McCann preferred not to share exact figures — well below Social Security’s annual limit.

In reality, his taxable income was likely even lower, given he could also make business deductions for tolls, car washes, water and snacks provided to passengers, and other business expenses. McCann said the total deductions have been enough to offset the “majority” of his ride-hailing income.

Ride-hailing has been a retirement hack for McCann because it’s allowed him to supplement his income while keeping his taxable income in check through deductions, allowing him to draw on his Social Security without penalty.

McCann said taking a traditional 9-to-5 job for $18 an hour, for example, — or roughly $37,000 a year — would have a “$0 benefit” for him financially after Social Security penalties and taxes were accounted for.

Retirees should study the tax implications before entering the gig economy

Lisa Greene-Lewis, a CPA and tax expert with TurboTax, told Business Insider that McCann’s strategy appears to be a sound one.

“Because the driver can deduct his mileage from his side gig income and make below the earnings limit, his Social Security income will not be reduced,” she said.

But even if a driver’s income falls below the annual limit, Green-Lewis said there’s one other scenario they should consider. If the combination of one’s income and half their claimed Social Security benefits for the year exceeds a certain threshold — as little as $25,000 — some of their benefits may be taxable.

“Many retirees often begin working side gigs, do freelance work, or receive other retirement income without knowing how other streams of income can impact how their Social Security income is taxed,” she said.

Since he began ride-hailing in 2021, McCann has completed over 5,000 trips. While the financial benefits are the main reason he drives, it’s not the only reason.

During his career in sales, he was constantly around people, McCann said. So when he retired — and began interacting with fewer people day-to-day — this was a difficult transition. He said ride-hailing has helped him fill some of this void.

“Ride-hailing enabled me to meet interesting people from all around the country and world,” he said, adding, “The benefits are work when you want, be independent, continue to draw Social Security, and pay minimum taxes.”

Are you a gig worker willing to share your story, pay, and best strategies for making money? If so, reach out to this reporter at [email protected].