Many people go into retirement as a personal decision to slow down or to attend to other interests – many others are “persuaded” into retirement because of changes in their industry. Irrespective of the reasons why you retired, it is normal to have a nagging feeling that you are quite done with work. Interestingly, available data suggests that many folks have an itching desire to get busy with work again once the initial novelty of retirement has worn off.
Why Starting a Business In Retirement Is a Good Idea
The Kauffman Index of Entrepreneurial Activity revealed that the number of new entrepreneurs between 55 and 64 years increased from 14.5% in 2010 to 22.9% in 2010. If you are one of the many people struggling with a desire to get out of retirement to start a business, this article provides three reasons starting a business in retirement is a good idea.
1) You get to make more money
When you go into retirement, your income takes a massive cut in that you’ll only get by with your pension, Social Security checks, and the returns on other investments that you have. Unfortunately, your expenses won’t take a cut during retirement unless you take proactive steps to reduce your expenses. Interestingly, it might be hard to reduce your expenses because it might affect your quality of life quite negatively.
Starting a business is of the ways through which you can open up additional sources of income in your finances. The average social security recipient receives a check under $1,500 each month ($1,341 to be exact) and the profits from your business can go a long way in reducing financial stress.
2) Starting a business is the perfect cure for boredom
Once you retire, you’ll start waking up at your ‘convenience’ without an alarm and you’ll be glad to have a blank calendar with lots of free time. If you have had a productive career life, the expanse of free time starts becoming boring. When the initial novelty of not waking to an alarm wears off, you’ll start looking forward to each little activity that could help you pass the time. The not-so-interesting part is that, leisure expenses in retirement often cost money – money that you may not have (refer back to reason #1).
Starting a business, however, is a great way to pass the time productively without a boss hovering over your shoulder. The other aspects of starting and running a business – writing your business plan, looking for startup capital, staffing, managing operations, growth and expansion – could fill your days with excitement.
3) The risks and downside of starting a business in retirement are lower
One of the biggest reasons many people can’t quit their jobs to start a business is that becoming self-employed has many associated risks and downsides. Many people choose to embrace the security that their job provides instead of taking up entrepreneurial risks. However, once you are retired, you’ll have a steady paycheck and you’ll have fewer dependents who need your financial support. Hence, retirement gives you the perfect opportunity to pursue your passions without worrying about how you’ll feed your kids if the business fails.
Warning: Just because you’re in retirement does not mean you can take huge risks. ie. Do NOT dip heavily into your retirement savings to start a business!
So what about you? Is starting a business in retirement right for you?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.