Carleen Nicholson, 65, of Dover, N.H., found herself in need of extra cash after an unfortunate series of events resulted in her being out of work due to a long sickness. Nicholson began isolating herself after her son committed suicide. She realized she had to take action at some point. Nicholson began driving for Uber, the nation’s largest on-demand ride-hailing service, for “money and sanity.”
While the urge to make money is an apparent motivation to begin driving for Uber, its archrival Lyft, or both — particularly in retirement — there are additional considerations. The importance of keeping yourself occupied cannot be overstated. Another benefit, particularly for retirees, is the sense of being useful. And, like Nicholson, you might want to go behind the wheel in order to interact with others. According to a recent survey, more than half of Uber and Lyft drivers are 51 or older. Surprisingly, more Uber drivers are over the age of 50 than under the age of 30; Uber has teamed with AARP to offer $35 sign-up bonuses to drivers over the age of 50.
However, a word of caution: the amount you’ll earn as an Uber or Lyft driver after expenses may be less than you think. Furthermore, some persons lack the temperament or disposition required for this profession. (However, for some, the profession can be extremely rewarding and lucrative.)
Here are 11 things you should know before becoming an Uber or Lyft driver:
1. Your real earnings may be lower than those stated.
Although an Uber research in early 2015 claimed that its drivers in 20 cities made more than $19 per hour, a Buzzfeed survey in late 2015 found that Uber drivers in Denver, Detroit, and Houston earned less than $13.25 per hour after expenses. In Detroit, they earned an average of $8.77 per hour.
According to a 2016 NerdWallet research of 14 of the major Uber and Lyft areas, in order to earn $50,000 per year, Uber drivers must provide 60 rides per week on average, and Lyft drivers must provide 84 rides. According to NerdWallet, drivers throughout the country earn more per trip with Uber than with Lyft.
Of course, how much you’ll make is mainly determined by how many hours you spend in behind the wheel. In its 20 largest cities, Uber claims that 80 percent of its “partners” work fewer than 35 hours a week, with more than half working one to 14 hours.
However, regardless of how much you’ll work, keep in mind the expenses you’ll pay – maintenance, gasoline, repairs, insurance, and taxes — as well as the commission Uber or Lyft will take. Uber maintains 25% of drivers’ fares, whereas Lyft keeps 20% to 25%. (In their Uber analysis, Buzzfeed assumed that driver expenses were equal to 25% of their gross earnings.)
You are liable for the majority of your auto expenditures as an independent contractor rather than an employee, including both the employer’s and employee’s part of federal self-employment taxes. Both Lyft and Uber, on the other hand, offer up to $1 million in liability and uninsured motorist coverage if something goes wrong while you’re in “driving mode.”