More retirees than ever intend to keep working past traditional retirement age. But age discrimination and job burnout pose major challenges to staying in the corporate workforce.
Entrepreneurship can be a great alternative work route for retirees – and it’s getting more commonplace. Entrepreneurs age 55-65 accounted for 26 percent of all startups last year, up from 15 percent in 1996.
While a startup may sound like a risky investment of capital, it doesn’t have to be. A “micro-enterprise” can help retirees generate supplemental income without putting much capital at risk – perhaps enough to forestall filing for Social Security or ease the pressure for drawdowns from retirement portfolios.
“Whenever I mention entrepreneurship as an option for working longer, people think it means draining your 401(k), spending capital, and taking an enormous risk,” says Chris Farrell, author of “Unretirement” a book about Baby Boomers, work and life. “But micro-enterprises allow you to work from home, take advantage of technology, not touching your retirement savings and using just a little money to experiment.”
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Farrell adds that if you think you have a service to sell, a micro-enterprise approach allows you to test it out. “Find out if there really is a market – if there is, then you can commit more resources and perhaps round up more money,” he says.
One way to do that: test out your idea while still working.
Kimberly Palmer is nowhere near retirement – at 35, she works full time as a senior editor for personal finance coverage at U.S. News & World Report. But in 2009, she started writing and publishing in her spare hours Palmer’s Planners, a series of personal financial planners that she sells on Etsy.com. The business only generated $200 monthly at its peak, but it helped stimulate other freelance work and speaking events that brought her side income to about $10,000 annually.
Another platform offering that kind of opportunity is Guru.com, which helps businesses connect with freelance workers; although the site started with a focus on information technology, it has expanded to cover more than 160 fields of expertise. Other examples include Elance and Fiverr.
The best time to start a micro-enterprise? While you’re still working. “If you get started before you retire or need the money, and can develop something that generates a couple thousand dollars a month, it can make an enormous difference once you do retire,” says Judith Rosenberg, founder of The SAGE Centers, a resource center for entrepreneurs 50 years and older. Most of the micro-enterprises Rosenberg sees are run by part-time entrepreneurs who put in around 10 hours a week.
Williams says his clients often start up businesses for well under $5,000 and incur monthly overhead expenses of less than $500. The most successful ventures he’s witnessed share three common traits: deep knowledge about a specific topic, the ability to consult or share knowledge about the topic, and the ability to sell their services online.