Starting a Business

Ready to start your own business?

What to consider if you're thinking about starting your own business post-retirement.

Published: March 12, 2013
Updated: February 22, 2017

After you stop working, a 25- or 30-year retirement could await you. If you don't feel ready to face full-time retirement or you want to augment your retirement income, consider starting a business after you leave your job.

There are numerous practical benefits. For one, the additional income can help you avoid dipping into your retirement savings, notes Kerry Hannon, a Washington, D.C.–based career transition advisor and author of What's Next?: Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. What's more, owning a business may enable you to delay taking Social Security benefits beyond 65, thus increasing your monthly payouts. (The benefits stop increasing after age 70.) 1

Another tangible perk: Research from the American Psychological Association shows that people who keep working into retirement tend to be healthier than those who don't.2

To be sure, creating a successful business after retirement requires smart design and careful execution. Since it may be several years before the business turns a profit, you don't want to risk your retirement funds on startup costs.

Planning for profits

There are ways to increase your chances of success. Hannon recommends starting small and carving out time to run the venture before you retire. If that's not possible, do advance work on your idea during your last few years on the job. Work with your financial advisor to make certain you're saving enough money to get you through the transition period, using these four tips as a guide:

1. Be financially prepared.

"For most businesses, securing capital is the biggest obstacle," Hannon says. Research the startup costs for your business and develop a plan with your financial advisor to help ensure that you'll have the funds you need. And make sure your choice of business will work with the resources you have already secured.

2. Know what you're getting into.

One of Hannon's clients, a corporate lawyer and lobbyist and avid gardener, started a landscape gardening business when she retired, only to find that the work was much more solitary than she'd expected. "Don't ruin your hobby," Hannon counsels. "Choose something you're actually going to enjoy working at." Apprenticing is a good way to try a new career without committing anything more than time.

3. Leverage your current skills.

Some of the most successful post-retirement businesses Hannon has seen have been started by people who combined their professional skills with their passions. One client – a former retail manager for an upscale department store – had always adored dogs. When she left her job, she opened a pet store in her town. She understood her clientele and brought a wealth of experience to day-to-day operations. "She was making money from day one," Hannon says.

4. Don't go it alone.

Before your new venture is up and running, set up a team of advisors to support you and network with industry experts and other entrepreneurs who have been down the same road. Organizations such as the U.S. Small Business Administration and AARP offer a wealth of tips, and the Global Institute for Experienced Entrepreneurship helps people over age 50 build businesses. You'll also need to retain professional services, such as accounting and legal advice. Involve your financial advisor, who can be a good sounding board for your ideas.

A business can provide the satisfaction of being your own boss and the opportunity to spend time on a passion project. So enjoy the preparation – and get ready to be a beginner again, Hannon says. "Retirement offers an opportunity to start out on a new path you've always wanted to follow."

Talk with your financial advisor about:

  • The benefits of delaying full-time retirement

  • Putting together a venture that will reward you financially and emotionally

  • Coordinating resources and advice to help ensure a smooth transition 

 


Social Security Administration, "Retirement Planner: Delayed Retirement Credits."

Ilya Leybovich, "Health Benefits of Working After Retirement," Thomasnet.com, 22 Oct. 2009.

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