Happily older people, baby boomers like me, are living longer healthier lives and often retiring early. This is the ideal time to start your own business and pursue your dream of becoming an entrepreneur. Know that the highest success rates in entrepreneurship come from founders in middle age and beyond. Source
Starting a business after retirement is an excellent way to earn extra income, supplement your retirement savings, reduce your tax bill, improve your mental and physical health, pursue your dream of becoming an entrepreneur while passing on your skills and knowledge to the next generation.
Not everyone has the personality, work ethic and drive to successfully start a business. But if you think you have what it takes, then know that retirement might be the perfect time to get the venture you’ve always dreamed of off the ground.
In fact, one-third of all US small business owners are baby boomers aged over 50 and 21% are over 60 thus the majority 54% of all business owners in the US are over 50 according to this report.
Keep reading to learn about the top reasons to start a business in retirement and get a list of my best business ideas for retirees – plus some cautionary tips.
Top Reasons To Start a Business After Retirement
Boost Your Income
Some retirees don’t have adequate savings, nor pension payments or social security benefits for living expenses. They need to boost their income to make ends meet. Starting a small business can fulfill that need.
Americans 65 and older are more likely to be self-employed than adults of any other age group. This means that as an older entrepreneur you will be in good company.
Because of the limited (and generally low-paying) jobs available for retirees smart folk go ahead and blaze their own trail into entrepreneurship and self-employment. Source
Greater Financial Investment Return
When you invest a portion of your savings into starting a business you have the possibility of receiving a greater return on your investment than traditional stocks or bonds.
Assuming an average 5-8 % of return on your retirement savings, if you invest that same amount into starting a business it could make 2-3X that amount in annual profit and tax savings plus you are building a valuable income-producing asset.
Save You Money
Starting your own income-producing company will save you money in two ways.
First, you will pay fewer taxes because you can deduct both startup costs and ongoing expenses (including housing, transportation, and utilities) from your tax bill. Read more in my article on how to avoid paying taxes by starting a business.
Secondly, keeping busy making money will prevent you from over-shopping with all the extra time on your hands after you retire. Having fun and filling your time with online shopping, gambling, outings, and travel will quickly drain your nest egg.
Improve Your Health – Mental & Physical
The transition from working full time to retirement can be challenging. Research has shown that retirement may increase the likelihood of suffering from clinical depression. Source
By keeping your mind active and building your company your mental health will improve and you will have a more positive outlook. Also learning new things and meeting different people will spark your interest in life. Your brain will stay sharp as it expands its knowledge of business techniques and strategies.
Also by starting a business you likely will be more physically active which will help your overall health and can also reduce your healthcare costs.
Grow Your Social Life
Your new business will also serve as an important new social outlet.
Most seniors who retire and then decide to go back to a job do so mainly because they miss their colleagues and daily social interactions. By launching your new business you will meet and interact with many new, and interesting, people zapping the lonely and sometimes isolating feelings associated with retirement.
DO’s and DON’Ts for Older Entrepreneurs
Before you go forth and launch your new company please heed this advice especially for those starting a business after retirement.
- DO NOT use all of your retirement savings for startup costs. No matter how sure a bet you think your new business idea is DO NOT use a large portion (or all) of your retirement funds. Over 50% of new businesses fail for reasons outside of the business owners’ control. So only use a small portion of your retirement income, and be prepared to lose it all. You may not lose it but you need to be financially secure if you do lose it.
- DO NOT Take out a 401K Loan – Please also do not borrow against your 401K because there are better ways to access your retirement funds for a business startup such as a 401K ROBS rollover. This is a process where you create a company that funds your new startup and you do not have to pay back the 401K loan. Monthly loan payments can cripple a new startup’s cash flow and growth potential. Read more about how you can use your retirement funds to start a business in my in-depth article here
- DO NOT Get a business loan – It is best to not start your business with borrowed funds. A better strategy is to start small with your own fiscal resources and build our company slowly by reinvesting its profits.
- DO consider a business partner – Consider joining with another entrepreneur to build your company together. Many younger businesspeople will appreciate your knowledge and experience as a business partner. Learn how to find a good business partner in my article here.
- DO plan schedule flexibility – Because you are older it is vital to plan your schedule to allow for your current physical capabilities. Plan your schedule with the flexibility to make the most of your time and energy. Be sure to consider the physical aspects of your chosen endeavor because you are not 21 anymore. Make allowances for some days when you will not feel physically energetic.
- DO learn new technology – Business technology is rapidly changing. It is important for you to keep up with advances and learn how to use tech to help your company succeed. Take time to learn about computer usage, the internet, and software. Attend classes at your local colleges, libraries or take courses online.
- DO invest in comfortable workspaces – As an over 50 entrepreneur myself, I invest in ergonomic workspace equipment such as large monitors, armrests and supportive desk chairs to stay healthy and avoid repetitive stress injuries.
- DO ask for help – Especially if you are a first-time entrepreneur take advantage of the many, free and low cost, entrepreneur assistance programs offered by government agencies such as SCORE and SBA. Learn more about these entrepreneur assistance programs in my article here.
- DO connect with other entrepreneurs – Use the buddy system either locally or online with other small business owners. Join your local chamber, get involved in your industry trade association, attend meetups in your field and join dedicated forums or Facebook groups. Together you can support and help each other succeed.
- DO get a business mentor – Reverse the traditional mentor relationship and find a younger person to be your mentor. While you have life and business experience they can help you navigate today’s complex business landscape. It could be mutually beneficial because they gain your wisdom and sage advice.
Top Ten Business Ideas to Start in Retirement
Here are some of my best business ideas for retiree entrepreneurs. Most require no employees and have low startup costs.
- Consulting – Use your hard-won knowledge and industry experience to help other companies succeed. Check out my list of the best consulting business to start today
- Online – Launching an online business from home is ideal for older entrepreneurs since it eliminates the need for commuting and opens up the world as your customers. From freelance writing to affiliate marketing you can make good money online. Here are my unique online business ideas suggestions
- Tutoring – If you know how to play an instrument, are good at math, or speak a foreign language consider becoming a tutor in your area or online.
- Senior Services – There is a growing demand for services to help the elderly from transportation, financial advice, and errands. As an older person, you can be uniquely helpful. Learn about business opportunities in the Senior market in my article.
- Food Products – Market your winning recipe and sell at your local market or online. Baking goods are especially profitable (Check out my list of catchy bakery name ideas here). Or you could teach cooking classes or write a food blog. Here are more of my delicious business ideas for foodies
- Beauty – If you are talented in nail art, hairstyling or facials you could profit from opening your own salon at home. Get inspiration for your salon name ideas on my list Or you could profit from one of these top beauty business ideas
- Reseller – Here is where you buy items at wholesale and sell them at retail for a profit. These are my 21 best reseller business ideas for beginner entrepreneurs.
- Creative – If you have an artistic talent such as being an artist, crafter or photographer these are great skills to build a business upon. Get 99 of my best art business ideas here and also check out my profitable photography business ideas to start today.
- Agricultural – If you have a green thumb, you could start farming, keeping bees or growing mushrooms commercially to make money. Learn more agricultural business ideas in my article here
- Rental – There are many rental businesses that you can make good profits including room rentals, storage, wedding equipment, and costumes. Learn more here on my list of rental business ideas.
Considering starting your business in Delaware to save taxes? Read about the benefits and risks of starting a business in Delaware in my article.
Read my article about how long it typically takes from startup idea to launch by industry