I will be retiring in less than a year and I’ve been thinking of ways to earn a little pocket change and also to keep myself (just a little) busy. I am considering becoming a Lyft driver.
There are four downsides to driving for a transportation service that I can think of:
Wear and tear on the vehicle – I have a solid, 2022 SUV that I expect to be driving very little post-retirement. Also, my Lyft hours would be part time – perhaps just one or two days per week – so I think my total weekly mileage would not be all that much, probably around what it is pre-retirement.
Obnoxious or drunk riders – I don’t plan to be driving the bar crowd, so that should minimize the inebriation factor. I live near a major airport; I’m thinking I would hang near there when I’m working, hopefully transporting primarily weary travelers. Mornings would be my best bet, I think. Of course, you cannot always avoid the obnoxious (or the crazy), but I have decades of experience dealing with those folks in my current job.
Modest pay – I hear all the time that you can’t earn a living driving Uber. I’m not sure if that is true or not, but I won’t need to “earn a living”. In fact, Social Security places limits on how much I will be allowed to earn without it affecting my payments. Again, this is just for a little extra jingle in the pocket.
Insurance – This is my iffy-est downside. The Google is not giving me definitive answers as to how to approach this part of the equation. More research is needed.
So, am I missing anything else that I should be considering? Please chime in, especially if you have experience driving for Lyft or Uber.
No experience doing it, but I use Lyft a lot–my understanding is the vast majority of drivers are in both systems, as that increases the number of fare opportunities you have and lets you pick and choose a little more.
I know several people that are paying their bills and making a living on the services, but both of the ones I know have other incomes (one was bought out of a job in his 50s and got early retirement, while it’s enough to cover his basics, he needs extra spending money, and he has a paid for car, so it works for him, the other uses the money specifically to support hobbies and extra-curriculars, he has a full time job.)
My general feeling about Uber and probabaly also Lyft is that their business model depends on two things:
Good drivers with clean, good-condition cars being available.
They can keep it up for a while until they run out of money. Then either they must accept a higher paying job, or their vehicle is no longer acceptable.
So it’s kind of a job you might do to string yourself along, but you’ll be losing money or value the whole time you’re doing it. Where do the big cost savings come from? The drivers. Both these companies and their riders benefit from the drivers.
Not to say that it isn’t fun, or that you don’t have control over where you go, when you drive or who your passengers are. You can control this to a large extent, and the driving can be fun and rewarding.
But it’s definitely NOT a way to make money. FWIW, the only time I had any money from the driving work was during tax time, when I was able to expense the business miles. The rest of the time, the rate of pay wasn’t enough to keep up with gas, insurance, maintenance, not to mention food and rent.
You do need to get this figured out. I believe Uber, at least, covers you while you have a passenger, but not necessarily while you’re going to or from getting one. Your own insurance, however, might exclude those parts of the trip too, so you need to be sure you’re covered at all times by one or the other policy. Very sure. I think I’d try to get my agent or a lawyer to put in writing what is covered and what is excluded from each policy. I’m not sure either would agree to do that, however.
I drove for both Lyft and Uber when I took an early retirement 4 years ago for pretty much the same reasons you are thinking about. Agree about drunks, no fun so I did not drive at hours when drunks would be a majority of customers (Friday and Saturday nights).
My insurance at the time (Progressive) has a reasonable rate for adding on a being an Uber/Lyft driver so it wasn’t a big deal.
Your idea of concentrating on the airport is spot on, there should be a spot near the airport where drivers sit and get into the que for picking up passengers, these are your you highest profit margin drives. The catch is trying to get a ride that is going back to or near the airport when you are done. There are features in the Uber/Lyft apps that allow you to only take passengers that are going in a certain general direction, but it may not be directly to the airport so you may get bored waiting for one and take whatever they offer, which may take you a lot further from the airport.
You will not make much more than $15 to $20 an hour driving for the ride share companies unless you get really good tips. I drove around a guy all day on clock, he was going around to cell towers and performing some updates to them. Only made about $180 for 8 hours of driving, but he did buy me lunch and gave me a $20 tip.
Let me qualify my answer a little more, seeing some of the other replies.
I drove back in 2014/2015, well before COVID, so that wasn’t an issue. Probably a problem nowadays.
I used Uber and Lyft for my sole income source during this time, in addition to living off of savings. Lived in suburban Seattle, so cost of living was high, but lots of driving opportunities.
As for controlling the rider situation, I typically drove in mornings, so I had commuters, and especially liked driving people to the airport. Surprisingly, it took Uber/Lyft a full year to work out a better way for me to actually pick passengers up from the airport; I guess these were pioneering days. The longer drives with quiet passengers were the best: good pay, no issues.
Driving in the evenings, particularly Thursday through Saturday, of course involved lots of people going to and from restaurants and bars. I didn’t have anyone so drunk they barfed, but there are stories. I believe I had more “hangry” passengers than drunks.
Yeah, there were few, if any, tips back then. When I used Uber or Lyft for personal travel after this point, I always made a point of tipping my drivers.
I don’t think the situation with the car is as bad as is made out. If you are buying a car you would not otherwise own, and solely using it for ridesharing, I think the economics are poor. But if you’re leveraging a car you already owned and already would be using decently often, I think it works out better. I also think you can drive pretty old beaters on these platforms.
I usually use Lyft Preferred which sends newer, larger vehicles; back when I used Uber I would use Uber Black. This isn’t really because I mind an older vehicle, it’s because I’m 6’5", and I had a few rides in the “standard” setting that were literally in really small fairly old American compact cars, and I could barely get my legs folded up in the back seat. Some of the cars I’ve ridden in at that service tier are pretty damn old and beat up, too. I don’t know the exact cutoffs, but unless you are wanting to drive for Black / Preferred you don’t have to always be driving a newer / upmarket car.
The office mileage reimbursement rate is currently 62.4 cents per mile. That means you can deduct your mileage when reporting income and will reduce your taxes on the income of the job, but it does not cover the expenses.* So, for instance, if you have $100 in mileage reimbursement and you’re in a 15% tax bracket, you’re spending $85 without reimbursement.
My father once said never take a job that requires that you drive your own car. The hidden costs of gas and wear and tear eat into any money you’re making.
*An employer paying the mileage rate is a different matter.
I put 70K miles on my car driving for Uber/Lyft in six months and had over 3000 rides given. It was enough miles that I could deduct it from my taxes.
Also I enjoyed driving for the most part. Lived in the Detroit metro area for 15 years at the time and did not really see much of the area until I drove for Lyft. I picked up a wide range of people as well, like I picked two of the people from Shark Tank followed by a woman who was complaining about the hooker that was doing tricks outside her apartment complex (saw it!). Been to the best neighborhoods in Detroit that I didn’t know existed and also to ones where the grass was three feet tall and rats running across the streets. I had some great stories to tell at the bar.
Also, the first month Lyft was offering bonuses for like $1000 if you gave so many rides within a certain amount of time, so I concentrated on that at first before I started taking rides for Uber.
I’ve ridden with one or two drivers who actually had cars leased for the specific purpose of driving Lyft / Uber. Dunno how the economics of that works out.
I’m a little vague on how the tax situation works out. I assumed that you could simply offset your total earnings, with the mileage - e.g. if you drive a thousand miles and the deduction is 50 cents a mile (not current, but it simplifies the math…) that’s 500 dollars in deductions; if you earn a thousand dollars for those miles, your net taxable income is 500.
I think that he may mean that only the miles while you have an actual passenger in your car are tax deductible. Your mileage going to pick a passenger up or just driving around while waiting for a passenger are not tax deductible.
I’ve never asked, but it seems pretty trivial for the uber/lyft driver’s app to automatically keep good mileage records of each ride while the customer was aboard. So the bookkeeping for that mileage deduction ought to be pretty painless.
Yes, Uber and Lyft track those miles and list them in the form they send you at the end of the year. But, it is not something you submit to the IRS if you itemize other things like maintenance, car washes, snacks for customers and other business items such as a laptop.
Bottled water is pretty common here in So Florida. It’s well short of universal, but I’m neither surprised when it’s offered or when it’s not. I’ve not encountered snacks.