You're part of the Baby Boomer Generation. You've worked your butt off, saved and invested well, and are ready to sit back and enjoy some much deserved relaxation...or are you? Many people who retire may feel as though life is just beginning, and there's a lot of truth to that. They welcome the opportunity to do the things they never thought they could, or never found time to do, such as start a business. This gives them something to do, and keeps the purpose in their lives thriving because let's face it; when you've been working for 40 years straight and then suddenly stop, you're going to get bored!
According to U.S. News, the baby boomer generation has redefined retirement in a good way, and Americans between the ages of 55 to 64 accounted for 25.8% of new businesses started in 2014, namely small locally-owned businesses. That number is continuously increasing.
Why Is Starting a Business In Retirement So Popular?
Retirees have spent years honing a skill set that is useful, and they relish the opportunity to work on their own terms and showcase their abilities without having to report to someone else. There's an element of freedom in self-employment that hasn't existed before. Additionally, they may be able to finance these businesses with some of their retirement savings. This could actually help increase the amount of retirement income they have access to when they finally decide to call it quits. Extra income streams are never a bad thing, right?
Taking a few courses in entrepreneurship, working out a financial plan, and determining how this could affect your retirement income are some good first steps. A financial planner should be able to provide insight on whether or not it’s wise to use some savings, how to readjust your income and tax strategy for a new business, and help set new financial goals.
Tips For Starting a Business In Retirement:
- Assess your skills: This is super important. In many cases you will have to do all the jobs in your office until you build up your staff. Can you handle it?
- Assess your time: Starting a business is very time-consuming. Are you ready to invest your time, energy, and resources into this venture?
- Assess your finances: Do you need capital? How are you going to finance this venture? Maybe using your savings is not a good idea. Can you afford to take on any debt? If so, how much? These are all important questions to consider.
- Form Strategic Alliances: Get to know other professionals and service providers that can support your business and their costs.
- Know your technology: Technology drives the business world. Learn the ins and outs of technology, and use it to your advantage. This can take a lot of stress out of the picture.
- Protect your assets: Incorporate and do what you need to do to avoid affecting your personal assets through this venture. This often means consulting with a knowledgeable attorney.
- Know when to quit: Even if your business is successful, know when to let your employees run the business. You may get to a point where you feel you’ve worked hard enough. Have an exit strategy in your overall plan and don't get married to any one idea. you don't want a pet project to wreck your retirement plan!
It’s a liberating experience to be able to do what you’ve always dreamed. Retiring doesn't mean your life is over – far from it. Consider following your heart and bringing your ideas to life!
Kyle A. Davis ChFC® is a financial consultant with a love for family, good food, and financial literacy education. When he is not enjoying the rays of his home state of Florida, he can usually be found assisting clients in planning for retirement, or scouting the newest sushi joint around town. Visit his blog at www.financialservicesamerica.com/blog or on YouTube at www.youtube.com/user/financialplannerinfl