Self-employment makes it easier for older workers to remain in the workforce, so "Why aren't we doing everything we can to encourage self-employment, especially among older people?" asks Angela Curl, an assistant professor in the University of Missouri School of Social Work and the lead author of a study on self-employment.
"If older adults delay claiming Social Security benefits, remain in the labor force and continue paying taxes, some of the pressure on the Social Security retirement system would be reduced," Curl notes.
"Self-employment can be clearly useful in the bridging years before retirement. People who lose employment during those years for a variety of reasons have a lot of trouble finding work. Self-employment can help," she adds.
In trying to answer this retirement planning question, Curl analyzed data from the 2010 Health and Retirement Study of U.S. adults and the New Zealand Longitudinal Study of Aging. She discovered that in both countries, men were more likely to be self-employed than women, apparently because of the way that men and women view risk. "Women have a different relationship with risk tolerance," she says. "If women hear that 9 out of 10 entrepreneurial businesses fail, they conclude, 'That is a good reason for me not to do it.' Men see it as a challenge. 'Nine out of 10 fail, then I'll be the one who succeeds.'
"Women are more concerned about the consequences of failure, while men are focused on the rewards of success," she says.
Among the things that legislators and the business community could do to encourage small business startups is to give older people of both sexes more tools for evaluating the potential for businesses and more help getting promising businesses off the ground. Legislators could also reduce legal restrictions that discourage people from starting small home-based businesses -- like running a barber shop out of the basement or a dog-minding business in the backyard. Financial support is particularly important. "Some small businesses have very low startup costs, but others require access to loans," Curl says.
Would you ever consider starting a small retirement business?