Posts Tagged ‘Baby Boomers’

Senior Entrepreneurs?

Saturday, July 11th, 2009
The Greatest Entrepreneurial Generation?

The Greatest Entrepreneurial Generation?

If you think that the most entrepreneurial generation are the twenty-somethings starting businesses in their college dorm rooms, think again. The Public Policy Institute of the American Association of Retired Persons reports that last year, 21% of self-employed Americans were between the ages of 55 and 64, while 10% were ages 65 and older. This trend may accelerate as Baby Boomers find that they lack the financial resources to support them in retirement. Mercer reported that the stock market decline’s consequence on retirement savings accounts was to extend by nine years planned retirements. And this is a generation not known for delayed gratification or savings, so they were inadequately provisioned to begin with. But this trend began long before the 2008 market decline. A 2005 study by the Center on Aging & Work/Workplace Flexibility at Boston College found that workers 50 and older are more likely than younger adults to own their own businesses.  I have mixed views on this subject. Certainly, I am all in favor of entrepreneurship. But that process is all about managing risk. If you lose your job, you lose your income. If your small business fails, as most small businesses do, you lose both your income and an asset: your equity in the business. At least with corporate employment, you can diversify your risk, if you wisely choose to invest your 401k and other retirement accounts in assets other than the company stock of your employer. In addition, when you start a new business, you often have to provide personal guarantees for various obligations, such as office leases. This puts your other assets, potentially your home, at risk. Finally, a 20-something entrepreneur has years to catch up on earnings if the business flounders. An older one doesn’t have the luxury of time. Entrepreneurship is a personally rewarding experience for creative expression. But it is not a panacea for inadequate retirement savings.