Finally, a chance to put up your feet, enjoy the grandkids and sip piña coladas by the infinity pool.
Or is it? Instead of getting ready to slow down, some of the 50-plus crowd is revving up to become business owners.
One-third of all small-business owners are ages 50 to 59, 17% are 60 to 69, and 4% are 70 or older, according to the 2018 Small Business Trends for Baby Boomers from Guidant Financial.
Don Russell, 66, retired twice – the first time in 1994.
“II retired from investment banking, which turned into an 18-month sabbatical before I got the itch to return to work doing merchant banking and private equity sales,” Russell says. “In 2014, I retired again.”
Three years later, Russell and two partners, also retirement age, started Clearwater Business Advisers, a management consulting firm in Tampa, Florida.
“I enjoy being actively engaged in new projects on a regular basis,” says Russell, whose firm advises senior business leaders in finance, corporate governance, sales, and talent management. “As a lifelong learner, I can utilize my experience and apply it to new situations for the benefit of others.”
Retirement is a great time to start a new venture, and here are some of the financial benefits of launching a business in your later years.
Earn extra income
Having additional cash on hand can help you accomplish many financial goals.
“You can pay down debt, like your mortgage or car loan, pay for health care insurance if you’ve retired before age 65 and don’t have other coverage, and navigate market volatility, so you don’t have to sell investments in a down market to pay bills,” advises Cynthia Meyer, CFP, Principal at Real Life Planning, a financial services firm in New York.
Need some inspiration? Meyer recommends Kerry Hannon’s upcoming book, “Never Too Old to Get Rich.”
Supplement retirement savings
The government estimates the average monthly Social Security retirement benefit is $1,461.
“That’s not enough to meet expenses and continue to live the same lifestyle,” says Priyanka Prakash, an expert at Fundera, a marketplace for small-business solutions. “Starting a business is a good way to keep up with living expenses, especially since you can earn full Social Security benefits at retirement age, currently 66, while continuing to work.”
Creating generational wealth
Sometimes, people start a business in retirement to provide a financial opportunity for their children or their heirs. “A successful company might be providing them a place to work, but it could also be a way to increase the value of their estate for the next generation,” says Megan Hanna, Senior Business Analyst at FitSmallBusiness.com.
While it’s vital to consider the financial gains, the emotional benefits of starting a company in retirement are priceless.
Passing on your skills
Drew Parker, a 58-year-old former merchandise financial manager living near Seattle, always had a knack for managing money.
“When I retired a few years ago, I created ‘The Complete Retirement Planner,’ an e-commerce system that allows anyone to easily develop a financial plan for pre- and post-retirement,” says Parker. “I created this business as a way to help others to get a better grasp on their finances.”
Parker offers the planner for $69.99. “This is a labor of love, driven by a mission to help others,” he says.
Keeping your mind sharp
Once you are retired, there is plenty of time. Why not stay active?
John Graham, 73, in Chicago, started a yoga studio in 2015, after retiring from the police force as a detective. “I started taking yoga classes to help me with relaxation, movement, stress and general wellness,” Graham says. When the owner decided to sell the business, Graham snapped it up.
The emotional upside: “I am learning how to use new scheduling software, organize special yoga workshops and do email marketing,” he says. “It keeps my brain active and alert, but the best part is the sense of accomplishment.”
Before you begin…
Starting a business at any age is a big deal.
“Have enough cash reserves to pay living expenses for a year and use savings or money from investors, not retirement assets, to fund the business,” financial services expert Cynthia Meyer advises.
“You’ll learn something powerful by doing it” she says, “because starting a new venture engages all your talents, drive and expertise.”