&l;p&g;The global population is living longer, and as a result, individuals have a wider range of retirement options than ever before. Retirement is no longer a transition into old age but an opportunity for new adventures and lifestyle freedom. The 21st-century retiree is faced with increased complexity due to changing retirement systems, rising health care costs, increased longevity and greater lifestyle options.
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When the Social Security system was created in the U.S. in the 1930s, the &l;a href=&q;https://www.ssa.gov/history/lifeexpect.html&q; target=&q;_blank&q;&g;average lifespan&l;/a&g; of a male was age 58 and a female was 62. Although retirement provided financial benefits for those who qualified for pensions and government subsidies, it also categorized individuals as elderly because health limitations usually existed or shortly followed.
Today, individuals over 60 are healthier and more capable than ever. A 60-year-old has a greater than 25% chance of &l;a href=&q;http://www.businessinsider.com/social-security-life-table-charts-2014-3&q; target=&q;_blank&q;&g;living to age 90&l;/a&g;, but the stigma of ageism may be a challenge for many. Although layoffs were experienced across all age groups during the Great Recession of 2008, older workers were disproportionally &l;a href=&q;https://www.frbsf.org/economic-research/publications/economic-letter/2014/april/age-discrimination-older-workers-great-recession/&q; target=&q;_blank&q;&g;impacted&l;/a&g; more than others. What&s;s more, 64% of workers over age 55 say they have seen or experienced discrimination in the workplace, and 58% &l;a href=&q;https://www.aarp.org/work/on-the-job/info-2014/workplace-age-discrimination-infographic.html&q; target=&q;_blank&q;&g;believe&l;/a&g;&a;nbsp;that ageism can affect workers as young as their 50s.
The implied contract between workers and employers has changed. It is no longer assumed that employment with one organization will last until a person&a;rsquo;s full retirement date. The changing nature of business, which includes additional technology and automation, mergers and acquisitions and increased global competition has changed reality for many. There is no longer clear visibility on the length of employment for anyone. Long-term careers with a single employer may exist; however, much like in professional sports, they are often a collection of short-term contracts. Longevity with a single organization comes from consistent informal renewals of commitment on both sides.
Entrepreneurship has become an attractive alternative for aging employees who are seeking work on their own terms, which may include the ability to select assignments, structure work hours and negotiate compensation. Entrepreneurship also allows retirees to shed unenjoyable aspects of full-time work while maintaining the professional identity it took years to build.
Although the success rate for new businesses has historically been low and somewhat intimidating, the story is somewhat different for older workers. &l;a href=&q;https://hbr.org/2013/06/entrepreneurs-get-better-with&q; target=&q;_blank&q;&g;According to&l;/a&g; researchers at Duke University, there are twice as many successful entrepreneurs over age 50 as there are under age 25. Older entrepreneurs are also becoming more successful over time. Individuals ages 55 to 64 &l;a href=&q;https://www.kauffman.org/~/media/kauffman_org/microsites/kauffman_index/startup_activity_2016/kauffman_index_startup_activity_national_trends_2016.pdf&q; target=&q;_blank&q;&g;accounted&l;/a&g; for 15% of flourishing entrepreneurs in 1997 and increased to 24% by 2016. Retirees are often more successful as entrepreneurs because they have more financial strength, personal stability and self-awareness than those in other cohorts. The confidence and wisdom gained from prior work and personal experiences can provide benefits.
If you are considering entrepreneurship as part of your retirement transition, here are a few things to consider:
&l;strong&g;1. How much should you invest in starting a business?&l;/strong&g; Although entrepreneurship may provide newfound freedom, it should not threaten the financial security you have worked long and hard to build. Before committing to a business, consult your financial adviser and discuss what types of business are appropriate for you. Converting a small hobby to a source of cash flow may be much different than investing in a fast food franchise. You should also discuss if borrowing and using savings are appropriate based on your financial position.
&l;strong&g;2. What personal risk may come from your business?&l;/strong&g; If you have had a full career as an employee, you may not have had to think about business liability and threats to your personal estate. By converting hobbies or other interests into a business, you may engage in activity that requires protection beyond your homeowners and personal umbrella policies. You should discuss your business plans with your attorney, insurance agent and other trusted advisers to discuss if the formation of an LLC, LLP, corporation — as well as business insurance — are advised to protect the assets you have accumulated personally.
&l;strong&g;3. Will you have fun?&l;/strong&g; Although you are starting a business, you are doing it as part of your retirement lifestyle. Activities in retirement should continue the things you enjoy about work, such as social engagement, achieving goals and having financial security. Make sure the venture you choose doesn&a;rsquo;t feel like work but, instead, meaningful play.
&l;/p&g;&l;div style=&q;padding: 20px 0pt;margin: 20px 0pt;border-bottom: 1px solid #DDDDDD;border-top: 1px solid #DDDDDD&q;&g;&l;a href=&q;http://www.forbesfinancecouncil.com/qualify/?source=forbes-text&q; target=&q;_blank&q;&g;Forbes Finance Council&l;/a&g; is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. &l;em&g;&l;a href=&q;http://www.forbesfinancecouncil.com/qualify/?source=forbes-text&q; target=&q;_blank&q;&g;Do I qualify?&l;/a&g;&l;/em&g;&l;/div&g;