For decades, seniors who have reached retirement age have retired and claimed their Social Security benefits. However, a change in our retirement age has prompted Baby Boomers to seek out an alternative option: Becoming entrepreneurs, rather than enjoying a traditional retirement.
The Changing Retirement Age
This shift in approach to retirement is partly due to the fact that the United States’ retirement age is rising. Traditionally, Boomers could claim their full Social Security once they turned 66, but a new change means that those turning age 66 in 2018 (those born in 1956) will need to wait 4 additional months before claiming their full Social Security benefit.
It’s part of a gradual increase in the retirement age. Each year, the Social Security eligibility age will be increased by two months. Ultimately, the age will be increased to age 67 for anyone born in 1960 or later.
Boomers who wish to start their Social Security benefits early will face larger reductions in their benefits as a result. Because of the increased retirement age, those whose retirement age is 66 but who start their benefits at age 62 will receive a 25% reduction in their benefits. Those with a retirement age of 66 and 4 months will receive a 27% deduction for starting their benefits at age 62. It makes better financial sense to wait until your designated retirement age before beginning your benefits if you can financially do so.
A Changing Retirement Landscape
But some Boomers are taking their financial future into their own hands. Rather than opt for a traditional retirement, they are seeking out entrepreneurship opportunities. According to the State of Entrepreneurship Study, they were twice as likely to start a new business in 2015 as millennials were. Many fund their businesses with the money they’ve put into savings from years of working.
Motivation Behind Entrepreneurship
So why launch a new business venture instead of retire? Boomers don’t necessarily believe that once they leave their traditional job they should retire entirely. Starting a business of their own gives them an opportunity to continue to contribute to the world, while possibly exploring a venture that they’ve always wanted to try.
Additionally, entrepreneurship means an opportunity for extra income. Older people may not have the savings that they need to be able to comfortably retire, and many have been affected by the recession. Entrepreneurship gives them a chance to work for themselves at a slower pace, while still contributing to their retirement savings.
Opportunities for Entrepreneurs
When it comes to entrepreneurship opportunities, the possibilities are just about endless. Many Boomers have a lifetime of experience from their full-time jobs, and they can put this knowledge and experience to work in their own ventures.
They don’t have to launch a full-time business venture to be entrepreneurs, though. Ridesharing businesses and grocery delivery platforms give them the chance to go into business for themselves with minimal startup costs and time investment. These platforms allow them to quickly and easily start up their own small businesses.
Linda Marie, the owner of Eternally Beautiful Women, started her own senior skin care blog when she retired from her full-time job. Linda states “This really has opened up many opportunities for me. I applied the skills I acquired as a sales rep for a beauty line and turned it into a great source of income.”
A Lifestyle Choice
While you may have financial motivations behind starting your own business, a journey into entrepreneurship is also a significant lifestyle choice. When you own your own business, you have more flexibility and independence to shape your work-life balance. You can create a business that is as large or as small as you want.
With a rising retirement age and platforms that make owning a small business easier than ever, it’s no wonder that so many Baby Boomers have decided to become entrepreneurs rather than to retire.