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Why not pick self-employment?

By Jennie L. Phipps ·
Wednesday, February 26, 2014
Posted: 12 pm ET

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?

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February 26, 2014 at 11:19 pm

Gee what happen to all those shovel ready jobs?

February 26, 2014 at 10:26 pm

OLE: An S-Corp is not really even necessary. An LLC is great, in my opinion. Much simpler than an S-Corp. and cheaper to set up / maintain. I've been self-employed for over a decade, after having spent two decades in the Corporate world. I wouldn't have it any other way. We are 'retiring' soon, but I will likely keep running my little one-man LLC for as long as I want. There are multiple tax benefits to doing so, as you know....

February 26, 2014 at 8:48 pm

I suppose that is the only answer for a lot of people in this Economy.

February 26, 2014 at 8:22 pm

If one is shrewd about starting a new small business especially as an S corp for example, a great number of options arise for those already near retirement age. First, you may be able to facilitate expense deductions like medical and liability insurance, all business-related expenses (not including egregious excesses like your BMW or Porsche commuter, dude), maximizing corporate contributions to your retirement funds, all of which may make your biz look marginal for taxation, but which max out your financial picture, for 2 or 3 years, after which time the IRS likes to see either a profit, or closure - otherwise, they may call your biz a hobby and negate all that good stuff.
A good CPA is worth every penny, in these areas, and will save you more than their fee.
Even if you just break even for a few years, that still postpones the time when you would actually be draining your retirement funds.

February 26, 2014 at 7:37 pm

I decided to work after NOT working for 14 years. I had various issues, such as health problems, several surgeries, taking care of my grandchildren. I (2013/2014 school year) applied and was hired and am now employed by a school district. I am a substitute and am able to not work on the days I can't and work when I can. I've never been happier, perfect location, perfect hours, (not so perfect pay) perfect holidays off.

Check your local school districts websites, retirees. You might find a perfect job/jobs that might suit you.

James Konefal
February 26, 2014 at 7:31 pm

I am doing exactly that! I got my licenses, letter of Inc., resale certificate and am starting an online business, drop shipping items. Basically phone calling out to customers and emailing them. Then I sell products to them. This gives me an opportunity not to retire too soon. I have issues travelling around due to limited mobility and this appears to be the best way to overcome this. I am of early retirement age (over 62) and this works out well for me.