Do Writers Retire?

If you’ve been working for years as a freelance writer, will you be considering retiring as other working people do? When you work for a salary, your job has an end point. For most people that’s around age 65 or a bit later. But for a writer, is there an end point?

Some writers, especially those who write books, have one or two successes, then nothing. While they may be in the limelight for a little while, it’s not a steady income. But a freelance writer, even a moderately successful one, has the ability to publish in different market for as long as those market exist.

But after you’ve been writing for 20 or 30 years, you may be ready to switch gears. As a freelance writer, you’ve been writing mostly non-fiction. Now that you’re approaching retirement age and a regular Social Security income, even though it may or may not be as much as you earned previously,

Do you know many former writers? Does that category even exist? Do you, as a writer, have an obligation to write or is that something you have for yourself? It’s one thing to stop feeling the obligation to write and another thing to never write anything again. After all, it’s as odd for a writer to be retired from words as it is for a man or woman to be retired from love.

Perhaps it’s not so much retirement from writing as it’s retirement from commercial publishing that you seek. After all, you have been putting up with the vagaries of editors for your entire career. Don’t you wish that you didn’t have to struggle so hard?

The Retirement Book of Genesis might read like this: “ In the beginning, there was no retirement. There were no old people. In the Stone Age, everyone was fully employed until age 20, by which time nearly everyone was dead, usually of unnatural causes.” That’s not true today, as people live longer and are more active for a longer period of their lives. So, too, are writers.

Retirement resulted from the pension system enacted in Germany in the late 19th century, but it didn’t come to America until the 1930s, when the country needed to find a way to make room for younger workers by encouraging older ones to stop. Older people like retirement because they get to stop working and still enjoy some financial protection, whether from the U.S. Government or from their own pension or 401K contributions. Young people like retirement because it gets the old people out of jobs, making room for them. Maybe there are too many writers—or not enough readers to go around. Unfortunately, compulsory retirement won’t help all the young writers out there.

Unlike sports celebrities, writers have fewer fans. They earn less money and their value to the public isn’t necessarily diminished by age—Charles Dickens did much of his best writing in his older years. In many cases, it is enhanced, not simply because there’s a real possibility that their talents will improve with years of practice, but also because readers want to interact with them at 90 as much as they do with writers at 20.

All writers are different, so it’s impossible to tell when each will produce his or her best work. Some never match their earlier work while others reach their peak mid career. Still others don’t begin writing until later in life and reach their peak almost near the end of their lives.

For a freelance writer, retirement actually means the end of struggling. Officially, you’ll gain a steadier income after 65—or now 66. And you won’t necessarily have to struggle to pay bills, so you can take a much needed sigh before continuing on.

Next Week: So You’re Retired, Now What?

Breaking the Bubble

Have you dreamed of quitting your 9-5 job and becoming a freelance writer? Sure, you have—and so have a lot of others, but only a few ever act on it. Have you ever wondered why?

Linda Formichelli, author of Write Your Way Out of the Rat Race, recently posted a blog for Writer’s Digest in which she extolls the virtues of quitting your day job to take up writing as a career. And while she touches briefly on a few of the negative points, she mostly presents a rosy picture of this transition. And why shouldn’t she? After all, she’s promoting her book, published by Writer’s Digest Books, on this very subject.

But there are a lot of pins, needles, and knives out there that will try to break your dream bubble before you even get started.

To break into freelance writing, you have two choices—literally jump right in by quitting your day job one day and beginning your writing career the next (definitely NOT recommended), or you can plan ahead for a smoother transition.

There’s more to making dreams come true than just wishing them so. Formichelli mentions feeding your family several times in her blog. But she doesn’t clarify what that means. First, how many people are in your family? Feeding them is only the tip of the iceberg. What about clothing, and medical and dental care?

Let’s face it, you have a better chance of succeeding in freelancing if you’re single. No, you shouldn’t divorce your spouse. But buying for one, you’ll eat less food, use less fuel in both your car and home, and need fewer clothes. Unfortunately, you’ll have to pay for your own healthcare now that you’re not working for someone else.

You may counter this by saying that if you’re married, you can add in your spouse’s income. That’s fine if you’re both working 9-5 jobs with a definite income, but as a freelancer, you income will be spotty, especially for the first few years. Will your spouse be willing to provide all the income for your family?

Few people are truly passionate about their jobs. Those who are find real satisfaction in working every day. If you’re planning to write full-time, you better well be passionate about writing. Otherwise, it will end up as just another job—albeit a job with LOTS of headaches.

Can you visualize your life in 25 years? Will you still be as passionate about writing then as you are now? There will be ups and downs. Writers experience burnout just like everyone else. Are you going to be able to deal with it? While your current boss may be demanding some or all of the time, he or she is the one ultimately responsible for keeping their business afloat. When you work for yourself, you shoulder all the responsibility.

But shouldering all the responsibility isn’t all bad. As a freelancer, you’ll have to power to control what you do. You’ll be able to choose your markets. However, there may be times when all your markets collapse at the same time. You lose all your income overnight. While you may think of giving up, what about feeding your family? If you have others that are dependent on you, you may have to think twice about giving it all up and returning to the rat race.

And while your income as a freelancer can be unlimited, the reality is that a writer can only work so many hours in a day or week. You can’t work 24 hours a day, no matter how much money you think you can make. Only a few freelancers ever see the big bucks. Luck has a lot to do with it. Most earn less than they ever could working for someone else, expect possibly working for a fast food chain on minimum wage. There will be times when you’ll be earning less than minimum wage. And don't forget the benefits like paid healthcare and contribution to a retirement account.

So while freelance writing may seem glamorous from the outside, once you’re on the inside, it’s a whole different story. Think carefully before you take the leap.

Budgeting for Success

Freelance writing is one part creative skill and one part business sense. The only problem is that too many writers who get into this business don’t have much of the latter. Unfortunately, this came from what most learned in school—albeit subconsciously.

Writing has always been looked upon as an intellectual endeavor. Therefore, it shouldn’t be tied in any way to business. But when you’re in business to make money, having a bit of business sense is a prime concern. And if you’re going to make money in this business—at least enough to live on—then you have to know what’s coming in and what’s going out. If these aren’t relatively balanced, you’ll be out of business sooner than you think.

To keep tabs on your finances, you’ll need to create a budget based on what you’re spending now and what you predict you’ll spend in the not too distant future. The best way to do this is to create a budget sheet for each month for at least six months. Doing so will let you know if you’re going down the right marketing path and making enough money to cover your expenses. Once you know how much you can afford to spend based on your earnings, you’ll be able to take control of your finances. If you're always coming out in the red, you’ll find it easier to change your work patterns once you're faced with the actual figures.

One of the best ways to start budgeting is to faithfully record the details on your budget sheet. After you've recorded these for a month or two, you'll have a better idea of what sums to enter in your budget for the month. At the end of the year, add them up and divide by 12, putting the resulting figure in the proper slot, even though you may pay some bills quarterly, semiannually, or annually. With an accurate monthly record, you'll be able to more easily adopt counter measures if your receipts aren't tallying with your expenditures.

Lay out your budget sheet like this: Divide it into three columns.

The first lists your sources of income for that month, your uncontrollable expenses, and your net income (the first minus the second). Under that, list your regular expenses—mortgage or rent, gasoline, equipment, office supplies, utilities, travel, etc—and the their totals. At the bottom, create a line for profit or loss.

The second column lists the predicted and the actual amounts in each category in the first column.

The third column lists the predicted and actual totals for the year to date.

A budget sheet faithfully kept will show clearly where your problems lie. Are expenses in one category heavier than you imagined? Is disaster looming around the corner if you continue to work for a specific market? Where and how can you cut down on expenses? Will you have to negotiate for a higher fee from your best client? Should you aim for more sales volume? Do you need to consider getting a part-time job? Are you paying too much rent? Are you billing properly? Has your inventory of stories and ideas been turned over quickly enough?

Obviously, this budget sheet, too, needs to be balanced monthly. Be sure you carry over the figures on the following month's sheet where indicated. To accurately record figures on this sheet, you'll have to tally up those petty-cash slips you've collected. Keeping an account of each expense as it occurs will help you tremendously in following a budget plan.

Count in the current inflation rate when you're setting up your future budget pages, saving yourself from too many unpleasant surprises when new costs arise. For instance, is your phone/Internet plan slated to increase next year? What about your health insurance premium?

By keeping an accurate tally of your income and expenses, you’ll be able to tell when you may possibly be getting into hot water. If you don’t, you may find yourself reaching for that life preserver all too soon.

It's Tax Time Again

Every year around this time, freelance writers cringe at the thought of filling out their tax forms. It needn’t be the anxiety-prone, stress-inducing time that some make it. In fact, if you’re organized throughout the year, it can be downright easy. But remember, the Internal Revenue Service, otherwise known as the IRS, puts the burden of proof squarely on you.

Although the IRS requires no specific accounting systems for businesses, the details it asks for do add up. You'll want to keep careful records of income, expenses, deductions—travel, entertainment, and business expenses in particular—as well as receipts for equipment purchased depreciation schedules, and miles traveled. The IRS requires that these records be accurate and accessible. So for this very reason, you need to move away from storing receipts in a shoebox to a more organizes approach.

Today, there are any number of computer programs that will help you with keeping accurate records. Whichever one you choose to use, be sure it allows you to enter expenses as you create them, recording amounts from receipts daily, weekly, or monthly. The sooner you do record them the better.  One program that’s particularly easy to use is Quickbooks Online. You can also install Quickbooks on your PC and use it there. There are also a number of cell phone apps that allow you to record your expenses. But make sure that the app allows you to synchronize with your computer and transfer the results to it, preferably to a spread sheet.

When can you toss out your  records, as far as the IRS is concerned? In general you can do this  three years after a given taxable year's due date for the tax return, or the date filed, whichever is later. These dates, however, are minimums. You should keep many records, such as cash books, depreciation schedules, general ledgers, financial journals, financial statements, and audit reports, longer. Plan on storing accounts payable and receivable records, canceled checks, payroll records, and invoice details for at least seven years. And don’t forget to keep copies of your tax returns.

You can deduct all of the obvious expenses involved with your writing business up to 100 percent of your gross earned income from writing, but no more than that. Obvious expenses include office supplies, equipment, postage, copying and printing costs, magazine subscriptions, book purchases, professional memberships, travel, business meals (50 percent), professional help, and so on. Keep receipts for all these items.

Expenses connected with your home office are also deductible, but the space must be used solely for your writing business, and you must be employed primarily as a writer. No other use of the same space is permissible. If you use one room of an eight-room house for your office, you’ll figure one-eighth of your mortgage or rent, plus one-eighth of your utility bills, etc. So you’ll need to keep receipts for all of these, too.

Automobile and mileage expenses—the portion used for business—are deductible as well. It pays to figure out your actual costs and compare them to the standard mileage deduction to see which way of calculating your expenses gives you the largest deduction. Generally, you’ll probably come out ahead with the standard mileage deduction which is more than generous. If you drive a lot for your business, keep a mileage log.

Be sure to record purchases of  office equipment and any related tools like software and cameras under capital expenditures. You’ll need to depreciate all of these items a certain amount each year of each item’s useful life which is usually five years. So you divide the total cost by five and take the resulting amount off as depreciation each year for five years.

One way to make sure you’ve kept all the right receipts in the right categories is to take the categories direct from Schedule C of your 1040 tax return. By doing this, you won’t forget any expenses, and they’ll also be sorted when it comes to filling in your tax forms. The more organized you are with this, the easier the whole process will be.

You may want to hire an accountant to prepare your tax return if you don’t feel up to it or if you’re too busy. However, only you can decide what to deduct—you have the final say. The fee you pay him or her is also deductible. Generally, the items you’ll deduct for your business will remain more or less the same each year. There are always a few changes but nothing you can’t sort out for yourself. Once you have everything in order, you can fill the forms in online and file electronically if you wish.

Are You Breaking Even?

As a freelance writer, you need to be aware of your finances or you won’t last long. Part of that is knowing your break-even point. This figure gives you a sense of how much you must make under certain conditions to cover your cost of operating with no loss, and unfortunately, no profit. It is  not really a place to stop, though. Breaking even, especially in these times, just isn't good enough.

So that you can move forward, you should do a break-even analysis which will allow you to consider the changes possible in your business—changes which might increase your profits or stop the drain on resources. To figure a break-even point, you must separate fixed costs—rent or mortgage, car payments, etc.—from variables.

Your break-even point is defined as that point where revenue equals cost. You need to separate expenses into fixed and variable costs. Fixed costs are those costs that remain constant over a short period of time. Variable costs are those costs that change proportionately to any changes in the volume of your business.

Dividing variable costs by sales revenue gives the portion of each sales dollar that is required to cover variable costs. This is known as the variable cost percentage. Subtracting this amount from a dollar will give you how much is left to cover fixed costs and profit, otherwise known as the profit-volume ratio. Since profit is zero at break-even, the division of the total fixed cost by the profit-volume ratio gives the dollar amount of sales required to cover all fixed costs.

Once you know this amount, you’ll need to do some income projections. Since you won’t be getting a weekly paycheck, you’ll need to know just how much work you’ll have to do per week, month, or quarter in order to reach your break-even point. In the beginning, you’ll probably project work for a month, but as you move forward, you may want to expand that to three months or a quarter.

List all work that you’ve lined up and add any other jobs that may appear once the quarter has started. Add up all the income you expect to receive, then subject the amount you figured above to cover fixed costs. This will leave the amount you need to cover variable costs.  If you come up short, figure how much and then find work to fill the void. If you don’t, you’ll have to carry over the shortfall to the next quarter.

When you get paid for each job, insert the amount to the right of the projected amount. At the end of the quarter, add up all the paid amounts to figure your actual income.

Augmenting Your Freelance Income

Basically there are three avenues to pursue to keep your freelance financial picture sunny: diligence in negotiating the best freelance deals, scouting for sources of augmenting that income from time to time, and adding secondary sources of income to the overall financial setup.

The prime ingredient in the discovery of funds to supplement income is your own ingenuity. People in other businesses have advantages you don't. They can, like the publisher of the magazine you write for, apply to numerous people to raise capital: customers, suppliers, insurance companies, banks, employees, other companies, venture-capital firms, investment bankers, and governments. If your business is a sole proprietorship, as is that of most freelancers, you don't have those options. The ability to get credit depends on your personal reputation. Third parties cannot invest in the business without incurring responsibilities for business debts as well. That usually means you have to rely on relatives or very close, good friends, which often isn’t a good idea.

If you’re thinking of getting a loan from your bank to tide you over, think again. In most cases, banks do loan small businesses money for operating capital or improvements, but freelance writing isn’t generally one of them. In fact, most banks don’t really consider you a small business. Plus, the loans they make to small businesses usually start at $50,000 or more.

An alternative to borrowing the money is applying for a grant. The pros and cons of public funding of writers are as numerous as the writers who do or do not get the grants. Living from grant to grant is much like living from paycheck to paycheck. The truth is that once you get on the grant merry-go-round, it’s hard to get off. Some writers actually write less and less the more they skipped from one grant to another since   it's easier to get a second and a third grant after you've got that first one. But getting that first grant can be a real challenge.

While there certainly are lots of grants out there, matching up their requirements to your situation is difficult. Let’s face it, if you want someone to give you money, you’ll need to fulfill their requirements. Also, one mistake on a grant application and you’re out. In fact, you may find writing a grant application harder than the writing you normally do. Grantors look for many things, least of which is good writing. For many writers, the chore of getting the grant in the first place may be more than it's worth. Searching for “writing grants” online will yield many sources.

Trying for prizes, on the other hand, may not be such a bad idea. If you have a novel on the back burner or if you write in a specialized field—travel, science, business, etc.), you may qualify for annual prizes given by a variety of organizations, some of which come with a cash award, no strings attached. Many prizes, even if they don't carry a cash award, will eventually help line your pockets, since the prestige of winning can be a feather in your cap and portfolio. If you do win a prize or receive an honor, milk it for all it’s worth. If you think you have a chance, take the time to fill out the forms and send in the required material.

Get creative when thinking up ways to bring in additional income. Perhaps you have an extra room in your house that you can rent out to a college student, or if times are especially tough, consider taking in a roommate or housemate to help meet your bills. You could also rent out equipment you have that you use only once in a while. Post notices everywhere, locally and online.

Lastly, consider selling items on eBay. While selling one or two items won’t bring in much, you could set up a sideline business selling items in a particular category such as collectibles. To do this successfully, you’ll have to set aside time to purchase inventory and pack and ship the things you sell. This will eat into your writing time, but money is money, no matter how you earn it.

If you look around you may find you have that other sources of income, no matter how small, that would help relieve the strain on your business budget.

Red Pen Redo

You’ve sent in your first article and surprise, surprise, it’s going to be published. A few months later you receive a copy of your published piece, but you hardly recognize it. What happened? Who could do such a thing? The answer is simple. It’s been edited, perhaps even rewritten.

At first glance you’re livid. “That’s not my work,” you say while gritting your teeth. Well, actually, it is.—it’s just been edited, mostly likely for clarity and length. Remember the person you sent your article to, the editor? That’s his or her job.

Your initial shock goes back to when you were in school. Academics guard their written words like gold and subconsciously—and in some cases consciously—impart that attitude to their students. So everyone comes out of school think their words are golden. However, in professional writing, there are two routes of editing—all non-fiction, especially articles, can be edited by an editor without consulting the writer while fiction cannot and the editor usually returns it to the writer without publishing it. If you write a novel, your editor will send the manuscript back to you with notations and suggestions for editing, but leave the editing, itself, up to you.

Writers relatively new to this business sometimes consider an editor's cutting or rewriting of their prose a loss.  The majority of editors will help you work by editing it, but there are some who do go too far.  There isn’t a writer out there who can't profit from that editorial red pen. On the other hand, there are some periodicals where as a general rule copy is almost totally rewritten in-house to fit the peculiar, well-recognized style of the magazine. If you object to your work being fitted into their prose style, perhaps you should consider another profession.

To proceed farther faster in this business, you’ll need to become your own best editor. The old salts say you should give even the lowest paying markets your best work. Frankly, if you ask any business person if they truly practice this, they’ll laugh in your face. Let’s face it, it’s just not good business. And editors of cheap publications know this. Their goal is to get your best work for as little money as possible. Remember the old saying, “You get what you pay for.” If you do run across a particularly miserly publication, ask what they can afford to pay you and then tell the editor what you can do for that amount. Giving your best effort on a shorter piece will take less time and will add value to your income dollar. Plus the editor will respect you for your professionalism, even if you don’t get your work published at that magazine. If the pay is low, you might negotiate for more regular work. The income from doing a bunch of short pieces can add up over time.

To make each piece you write the best you can do, you’ll need to do some revisions. It’s best to study a publication to see how long the articles or short stories are and write yours to match that length than it is to write whatever length you feel like doing. There’s only so much space in a magazine, and if you expect to get published often, you have to pay attention to the length of your works.

As human beings, we aren't organized to spout forth perfection. That’s what the first draft is for. But after you’ve gotten down everything you think is relevant, then it’s time to take a closer look. Those who seem to be talented writers have most likely spent years silently developing and editing their pieces.

To sharpen your editing skills, try some of these exercises. With your 3,000-4,000-word article or story in front of you, imagine you’re required to edit it to fit a magazine page that only allows you 1,500 words. That may sound like a challenge, but how about cutting a 12,000-word first draft down to 1,500! You've got to be extremely concise and pack a lot of essential information into as few words as possible. In fact, today’s print magazines are running more 300-500-word articles than longer ones, following the lead of those on the Internet.   

If you still need help, ask an editorially talented friend, sibling, or spouse to critique your work.  Your writing will improve, and so will your ability to undergo the scrutiny of an editor’s red pen.