I think those who actually dream of retiring on a deserted island spending their days in the sun doing nothing but relaxing are far and few between. For one, many retired folks have a family, especially grandchildren that make it hard for them to escape to a tropical paradise. And more importantly, a large number of people retiring will barely have enough money to get by. Here are a few alarming statistics provided by GoBankingRates.com:
- 1 in 3 Americans has nothing saved for retirement
- More than half of Americans have less than $10,000 saved for retirement
- 76% of baby boomers aren’t confident they’ve saved enough for retirement
- By 2033, Social Security will need to be cut by 23%
Those figures can be a little scary, if accurate. So what is one to do in light of the lack of savings and income going forward?
Start a business!
While being an entrepreneur can be overwhelming to many, it could be the perfect segue for individuals in their sixties to obtain supplemental income. You don’t necessarily have to have the latest technological innovation or head to Silicon Valley for venture capital. Work within a niche you know and like and go from there. According to the U.S. Bureau of Labor Statistics, those 65 and older or more likely to be self-employed, giving them the ideal opportunity to start a business.
A benefit to working and being in business is that you will not only (hopefully) increase the income side of your financial statement, but also pare down the spending side. This goes for those that are not of retirement age as well. If you are occupied during the majority of your day, you will have less time to spend money. Museums, trips, going out to dinner can all add up to a sizeable portion of your cash flow.
If you worked your entire life or raised a family, you have been occupied in a healthy way, which often can end as our children or family have grown and gone. According to research from the Institute of Economic Affairs, retirement increases the likelihood of suffering from clinical depression by 40 percent. Keeping active and your mind empowered with the idea has proven medical benefits. In addition to the mental health benefits, the flip side of the coin is what running a business can do for you physically. Depending on what you get into, your business will likely involve labor, whether it is packing and shipping products, or running around town meeting with clients or advertisers.
This can be tiring, but also physically rewarding. In addition, the interaction with people will be a positive for most. In a study by Rand Corp. published last year, seniors who retired and then decided to go back to their jobs did so because they missed their former colleagues more than for any other reason. I’m guessing there is quite a chasm in that statistic as it compares to millennials.
You also have to realize that not everyone is cut out for being an entrepreneur and able to handle the risks that come with it, especially as a senior. When you are young and entrepreneurial, you have time on your side to minimize any losses in the short term. Seniors don’t have this advantage. If you are capable, start small and see where it goes.
One point to mention. Many business partnerships end in acrimony. I would advise that if you do something, do it yourself, and without a partner. Even your spouse. There is no need for that added pressure in your golden years.