Not ready for the rocking chair?
The average age of individuals retiring in the United States is 61. However, most people cannot collect full benefits from Social Security until age 67 (if born in 1960 or after). Most people are not eligible for Medicare until 65 and even once benefits begin, individuals are finding they want more than a “fixed income.” What are a lot of smart older Americans doing to fill the financial gap and to stay active? They are starting their own small businesses!
Why would I start a business after I retire?
Starting a business once you’ve already retired may sound crazy, but the trend is increasing due to the benefits and fulfillment found by retired individuals. A few reasons to start a business after retirement are:
- You have time: Retired individuals are often finding themselves at a loss as to “What to do next.” Having time to invest in a new adventure makes new business ownership attractive.
- You have the money to invest: Many retirees have extra retirement, cash or other investments that can easily be put to use in a small business venture.
- Pursue your passion: Perhaps you’ve had something in the back of your mind that you’ve always wanted to do; a hobby or talent that you’ve wanted to share? A new business can be a great avenue to explore and pursue your passion.
- Stay active and mentally alert: There is a saying: “If you don’t use it, you’ll lose it.” Many retired adults worry that they will not be able to stay active and retain their cognitive dexterity. Starting a small business will help you flex both your brain power and your muscles, helping you stay vibrant both physically and mentally. After all, who really wants to sit in a rocking chair for years after retirement?
- Social outlet: Human interaction is important, especially if you have retired. The way you structure your small business can help give you the socialization you need.
- Extra income: Retirees often take a healthy reduction in pay once they retire. Small business income can offer added financial stability.
- Tax advantage: Small businesses are able to write off eligible expenses, which lowers an individual’s taxable income. Retired, small business owners find the tax saving very attractive.
Am I too old to start a new business?
Mark Twain said: “Age is an issue of mind over matter. If you don’t mind it doesn’t matter.”
Today, more and more retired individuals are starting a new business. In fact, half of small business owners are over 55 years old, according to the 2020 US Census Bureau. 18% of small business owners are aged 60-69 years, while 4% are over 70 years old.
What do I need to consider if I want to start a business after retirement?
When starting a new business, or buying an established business after retirement, there are a few questions to ask yourself:
- Is it something you like? Owning a small business in retirement should be enjoyable. The goal is to feel like you are doing something fun, that you like to do.
- Have you done your homework? Does the new business idea offer something people want and will it be profitable?
- Do you have the money to invest? You shouldn’t pour your entire life savings into a new business, but you could leverage some of your own wealth to invest in a new venture. Talk to a financial advisor who can walk you through your options and give you an educated opinion as well as the best way to invest.
If you are retired and are considering small-business ownership, come talk to us at Collin SBDC, serving Collin and Rockwall County. We can help you with a business plan, understand your options for funding, and give you the information you will need to succeed in your new endeavor. Click HERE for more information.
For additional resources and information on starting a business after retirement and the things you should consider, please contact our experts at the Small Business Development Center – SBDC – serving Collin and Rockwall Counties, Texas.
*Blog by Michael McClinton