Ready to be a ‘seniorpreneur’?
Working past what was considered to be retirement age is becoming more popular. A poll released by TD Waterhouse in December 2004 found that one-third of the respondents expected to work past 65, not just because of financial need but because they wanted to. This trend has led to legislative action in a number of jurisdictions to remove mandatory retirement age statutes — Ontario did away with mandatory retirement in 2005, in part because of pressure from CARP.
If you want to keep working through your 60s and beyond, what sort of jobs should you consider? In researching my new book, The Retirement Time Bomb, I found many fascinating ideas.
Anyone who has special knowledge or skills may be able to profit from them by consulting. It is not uncommon for senior executives to continue to provide services to their former companies after officially retiring but, unless you have a contractual agreement, you’re not limited to your ex-employer. You may be able to earn big dollars in this way.
Tip: If you consult for a number of companies and the income is likely to be substanal, consider incorporating. Setting up a company involves upfront costs, but the tax savings should more than make up for that in a year or two.
You may be able to continue working at your old job on a part-time basis after you start drawing a pension. Many employers prefer this arrangement: it reduces costs while eliminating the necessity of training a new person.
Become an entrepreneur
The number of 50-something retirees out there is astonishing. It’s become an invisible growth industry. In 2005, USA Today ran a front-page story in which it reported that 5.6 million Americans over age 50 are self-employed, a 23 per cent increase from 1990. They bake cookies, build furniture, sell real estate, renovate homes, publish books — you name the business and you will probably find a retiree doing it.
I have friends who actually went through three different entrepreneurial stages once they retired. Stage one was buying and renovating homes in a fast-growth area of Florida, which they then sold for a profit. Stage two was doing the same thing with a small motel, supplementing their income through rentals until the work was completed. Stage three, which they are still doing, is breeding show-quality puppies that they sell all over the U.S.
Another friend, a retired policeman moved to Florida and turned his interest in computers into a business that he runs out of the garage of his home. He builds machines to order for clients, does repair work and supplies equipment at a modest mark-up over wholesale, which earns a little extra for him and makes the customers happy.
There are thousands of other stories like this, so if the idea appeals to you, go for it. Just remember these rules:
• Do something you enjoy and are good at. Don’t take on a lot of stress at this point in your life.
• Start small. Don’t overextend yourself. Find out what your limits are and work within them. Leave adequate leisure time for golf, tennis, fishing, family, travel or whatever.
• Don’t invest a lot of money up front. See if the business takes off and, if it does, use your cash flow to expand if you wish to do so.
• Consider incorporation. If your income is modest, it won’t be worth it but if the business takes off, you’ll save taxes.
• Have a back-up. You’re not as young as you used to be. Have a contingency plan to look after your customers if you are taken ill or want to go on an extended vacation. My friend with the computer company has made arrangements with a local computer store to take care of his clients in such circumstances and to handle overflow work.
• Have an exit strategy. You’re not going to do this forever. A study done for CIBC World Markets in 2005 found only 40 per cent of “seniorpreneurs” had a strategy for exiting their businesses. If you are going to start a business, make sure you can finish it.
Opinions expressed are those of the writer and should not be understood as offering advice. Information is of a general nature and may not be appropriate for any single individual.