When you think of retirement, what comes to mind? Perhaps you’re hoping to travel more, spend time with grandchildren or simply relax. Whilst they’re all plans that are associated with retirement, some are keen to buck the traditional as more retirees turn their hand to launching businesses.
Is it something you could see yourself doing?
If the answer is ‘yes’, you’re definitely not alone. Asking workers what they’d like to do the most when they’re old enough to retire, 10% revealed they had the ambition to launch their own business, research from Aviva revealed.
Additional research suggests it’s not just an idea either, many retirees are following through with plans to become an entrepreneur in retirement. Findings indicate that the over 50s are now responsible for one in nine small businesses. Among those stepping into the world of start-ups when over 50, four in five are starting a business for the first time. From turning a hobby into a money spinner to putting an idea that’s been in the back of your mind into practice, there are endless options.
Why start a business in retirement?
Launching a business certainly isn’t a traditional pursuit associated with retirement, but it is part of a wider trend. With healthier, longer lives, many approaching retirement age are finding they aren’t ready to step away entirely from the world of work. Instead, they are favouring a transitional approach that sees them with more free time, but still retaining some working commitments. Of course, finances are playing a role in the decision, but other factors are often just as prominent.
Being your own boss gives you an opportunity to set out a work-life balance that suits you as you reach retirement age. Technology advancements mean it’s easier than ever to work flexibly and still drum up business. It means it’s possible to mix starting a business with other retirement aspirations, including spending some time abroad.
Aside from this, there are other reasons why retirement may be the perfect time to launch a business too:
- Greater financial security: Hopefully your financial security has improved as you’ve gotten older, giving you more freedom over the years. With pensions and other assets earmarked for retirement, you may not have to worry about where your next pay cheque is coming from as you did in your 30s or 40s. If this was a worry that’s held you back in the past, dipping your toe in entrepreneurship in retirement could be right for you.
- Fewer responsibilities: Linking with the point above, most retirees find they have fewer financial commitments than they did previously. Perhaps you’ve paid off your mortgage, no longer need to run two cars or your children have grown up and moved out. With fewer responsibilities, you may be more inclined to invest some of your money into getting your business off the ground.
- More free time: Starting a business before retirement may have meant a period of trying to juggle ambitions with your career as you test the waters. Retirement will often bring you more free time to invest in creating a successful business. With fewer priorities eating up time, you can focus on building up skills, contacts and the know-how that’s needed.
- Confidence: Many people think about starting a business at some point in their life, but few take the plunge. If that sounds like you and confidence was holding you back before, it may be something that’s less of an issue today. As we gain life experience, we often find that confidence in our own ability grows too.
- Skillset: Whilst you may not have launched a business before, you’ve inevitably picked up some useful skills along the way. Decades of working and learning from managers, CEOs, experts in their field and others puts you in a position to make use of a variety of skills. Recognising where there are gaps in your expertise and where help should be sought is just as important too.
Launching a business in retirement and your finances
If you’re thinking about launching a business in retirement, there’s a lot to consider. Among the areas to think about is how it’ll affect your personal finances. Financial planning can help you understand how your savings can help you live the retirement lifestyle you want whilst building a business. For example:
- Can you afford to use retirement savings to invest in your business?
- How long will your retirement savings provide the lifestyle you want for?
- Would a business change your tax liability?
- How could business profits enhance your retirement lifestyle?
Starting a business in retirement can be a dream, but it comes with challenges too. Knowing your personal finances are in order can give you the confidence needed to face them.
Please note: Advice on Tax Planning is not regulated by the Financial Conduct Authority.
Please note that the information provided in this article was correct at the time of publishing.