Your Second Wind: Starting a New Business in Retirement
Prior to recent generations, the typical work pattern of an individual was to enter the workforce, work until their 50s or 60s, and then retire and never think about going to work again. The Baby Boomer generation, however, is redefining retirement by exploring different ways to continue working during the time they are viewed to be “done with work,” and many are doing so by starting their own business. According to the Kauffman Index of Entrepreneurship, people ages 55 – 64 make up 24% of new entrepreneurs!
If you’ve fantasized of being your own boss, finally chasing your greatest passions, or even learning something totally new, let’s explore why retirement may be an ideal time to pursue your entrepreneurial spirit.
Why does entrepreneurship in retirement make sense?
Retirees Have the Experience
- The uncertainty of entrepreneurship at the age of 22 or 23 can be daunting. A young, aspiring entrepreneur might have the appropriate drive and creativity, but it is unlikely that they have the reassuring, real-world experiences or even the necessary capital to launch a business. In this regard, a retiree has an entrepreneurial edge over younger people because they have experienced the working world for many years and have seen the hard work, determination, and planning it takes to be successful. Additionally, a retiree has seen enough of life to know the different facets that could possibly go into building a strong foundation for their business, and they have likely built a network of contacts and business partners throughout their working years that they can turn to to help them get their idea or skill out into the market better than if they were on their own.
They Also Have New Free Time
- After managing your time and balancing your priorities over a 30 – 40 year career, retirement offers a significant amount of free time that can feel completely foreign to many people. This is another reason that many retirees turn to starting their own business in retirement. Being an entrepreneur means you get to be your own boss, and choose when to tackle the next obstacle that faces your business or take that next vacation! Starting a business in retirement can provide a retiree with the opportunity to occupy some, not all, of that free time chasing a passion they developed over the years, while leaving enough time for themselves to not feel like they’ve begun a second career.
Where’s the Risk?
- As was stated before, the thought of entering the workforce at 22 or 23 and trying to carve your idea or passion into a business that can financially support you can be daunting. Add to this that down the road, you may have a family to provide for, and all of a sudden that entrepreneurial idea probably seems even riskier and harder to attain. Of course, there are always risks associated with starting a business, but a retiree is likely to have more savings and possibly an income stream from Social Security to help offset the financial risks of entrepreneurship.
Good for Your Health and “Staying in the Game”
- Being productive, acting on our passions, and attaining goals can do wonders for the mind, body, and soul. In fact, some say the most important thing to a long-term healthy life is to keep the mind active. According to research by the Institute of Economic Affairs, they have confirmed that mental functioning can decline if the brain isn’t stimulated2; there’s no doubt that a small business venture can keep the brain juices flowing and engaged!
- Furthermore, one of the hardest adjustments in retirement can be the decrease of social interaction. Not seeing coworkers and colleagues everyday can be a huge change for some retirees, and starting that small business in retirement could be the source of “staying in the game” and enjoying that much-needed interaction with others.
This all sounds great, but what should I do?
- As you have probably caught on, developing a small business after retirement is all about what YOU want to do. You get to choose the time, the days, the people you work with, and the service or product you want to provide. So, what are your interests, your passions, or that one invention you never got around to creating? Maybe you love a certain sport or a sports team; have you ever thought about organizing tours for ballparks or football stadiums? Do you love to write or speak to entertain? You could start a blog, a podcast, or a radio show for your local station to share your expertise on a certain topic. Some retirees also consider consulting for other companies that could benefit from their expertise in their specialized field.
- Of course, it’s also important to consider what the financial impacts would be if you did decide to start a business. Creating a budget is a great way to start thinking about all of the associated expenses and potential inflows that can serve you now and into your retirement future.
Our team would love to dream big with you about your goals, priorities, and passions for your retirement, so please feel free to share with us any second wind ideas that you might want to explore more seriously. We’d love to walk an idea around the block with you and be a part of your decision-making process in whatever way you feel would be helpful.
- Fairlie, Robert W., et al. “Kauffman Index of Startup Activity: National Trends 2016.” SSRN Electronic Journal, 2016, doi:10.2139/ssrn.2828359.
- “Retirement Causes a Major Decline in Physical and Mental Health, New Research Finds.” Institute of Economic Affairs. May, 16, 2013.