How to Earn a Million Dollars As A Musician
I started folkefire with a goal: to earn a million dollars over 30+ years performing mediocre music by taking my gig money and investing it into a broad-based index fund in my ROTH IRA, maxing out my contribution each calendar year.
On Monday, St. Paddy’s Day, I performed a gig with a couple of friends. Our set included traditional Irish songs, originals, and folk classics from Billy Bragg, Bruce Springsteen, Great Big Sea, The Dubliners and others.
It was a perfect night of music! For us anyways.
We had no pretensions about being well-liked, well-regarded or well-received. Though we practiced and performed our best regardless. We got to play songs we chose for ourselves, befitting our own niche personal interests - and we had a blast. My favorite moment was when my pal Eric decided to play a song the other two of us had never learned, calling out predictable chords over his left shoulder.
After the gig we were paid in cash, thanked the establishment, and I walked out of the venue to deposit the earnings into my ROTH IRA.
I don’t take for granted that I have a full-time job and can easily deposit money earned from my mediocre musical talent into a retirement account. But it begs the question, is this a worthy goal for other musicians?
I’d argue yes - and I’d recommend that all musicians who are able, follow suit. To learn more about the theory behind my strategy, read this.
On “Making It”
When we’re younger, many of us had a desire to ‘make it’ - or become so successful from our artistic craft that we could self-sustain our livelihoods.
I threw in the towel around the year I became eligible for the 27 Club and then spent a few decades focusing on my marketing career while playing gigs on the side.
Usually money earned from music during this time period would go into my pocket and be spent by the following weekend on coffee upgrades (un grande latte, si vous plais), unnecessary bagels with bourgeoisie accouterments, meals out with friends and other libations.
But what if my music-related goal from a young age had been to earn a million dollars tax-free from music by maxing out my ROTH IRA each year using funds acquired from performing, and putting those monies directly into a broad based index fund?
The basis of my idea is formed by Mr. Money Mustache and his Shockingly Simple Math, paired with everything I learned from reading and listening to JL Collins, Vicki Robin, the ChooseFI Crew - and not to mention decades spent listening to musical mentors like Radiohead, Flogging Molly, The Dubliners - and paying keen attention to stories of musicians that had catastrophic bankruptcies like MC Hammer, David Crosby and others.
What is a ROTH IRA?
If you’re not familiar with a ROTH IRA, it’s a tax advantaged investment account that allows you to invest in the stock market and allows funds to grow tax-free until you reach retirement age. I set up mine through Charles Schwab and it was easy. There is no other retirement account quite like it. The 401k, for example, is tied to your employer and goes in tax free, but is taxed when you withdraw in retirement. If you need that money before retirement, you accrue a 10% penalty. A traditional IRA is after-tax money that is taxed when you withdraw it at retirement. Read more about the ROTH IRA from a FIRE legend, the Mad Fientist.
To better illustrate the value of a ROTH IRA, take a look at this projection for an 18 year old maxing out their ROTH at $7,000 per year for 34 years.
Make it stand out
Whatever it is, the way you tell your story online can make all the difference.
In this example you can see this teen starts with $0, invests $7,000 per year they earn from busking, playing coffee shops, being hired for weddings - and puts that money directly into an index fund in their ROTH ERA, and has more than $1 million by the age of 52. That’s better than most successful musicians and is the classic example of the turtle overcoming the hare. In this case, it isn’t better to burn out than to fade away - but another case where boring, slow and steady wins the race! This calculation is based upon inflation-adjusted investment returns for someone investing in a broad-based index fund like VTI. It doesn’t take into consideration that the $7,000 contribution limit will likely increase as this young person ages, ensuring they get to $1million even quicker. Unfortunately for them, they will have to wait a couple years to access all of this money tax free - but - they can access part of the initial investments tax free.
Let’s take a look at another scenario.
Make it stand out
Whatever it is, the way you tell your story online can make all the difference.
In this example of a 30-something getting a late start (earlier than me!) and starting with zero, they’d have a million dollars just before they hit retirement age at 64. That means, in addition to drawing social security and whatever other retirement income they have, they could also draw from a million dollars that they earned playing live music! Hell, maybe they will continue well into their 60’s like The Rolling Stones and use the overflow cash as a kind of Barista FIRE lifestyle. A gig that pays $100 per night now might pay $1,000 per night in 34 years due to inflation! If not, one may rest assured that their wisely invested income will grow regardless. Let’s take a look at one final scenario.
Make it stand out
Whatever it is, the way you tell your story online can make all the difference.
This one is me. This view is a bit of a cheat because I don’t have $130,000 in my ROTH but I have it in my collective retirement accounts. If I maintain this path, saving $7,000 per year, I will have a million dollars by the time I hit 66 years old, or one year after the traditional retirement age. My goal right now is to gradually increase my musical aspirations to max out my ROTH each year from bar gigs, while also contributing as much as I can to my 401k. If I were to do this solely from my ROTH contributions, and don’t account for increases to the allotment, I’d be 71 by the time I earn a million in my ROTH.
Fortunately for me, I am able to save more than this each year from my day job - but I really need to get my butt in gear to earn $7,000 from performing music. Let’s just say the $.22 per year I earn from streaming services isn’t cutting it!
