If you're among the many retirees who spent decades working long hours and struggling through the daily grind, at first glance, the idea of starting a business in retirement may not hold much appeal. After all, retirement is supposed to be a time of leisure, relaxation, and rest, right? While starting a business does take work, retirement is actually a great time to pursue that venture you've always dreamed of. Here are just a few reasons why.
1. You can make money
Many people struggle financially in retirement because their income is mostly limited to Social Security benefits. The National Academy of Social Insurance reports that Social Security provides the majority of retirement income for as many as 65% of its beneficiaries, and that it's the only source of income for almost 25% of Americans 65 and older. These days, the average Social Security recipient gets just $1,341 a month in benefits, which, for many, just isn't enough to live on. Whether you're faring well financially in retirement or having difficulty making ends meet, starting a business can generate extra earnings at a time in your life when your income is otherwise fixed. Even just a few hundred dollars' worth of profit each month can make a big difference to the average retiree, and if you're doing something you love, it's probably a more ideal way to bring in extra cash than a part-time job at the local supermarket.
2. It's a great way to occupy your newfound free time
When you spend the majority of your waking hours working and commuting to and from the office, leisure time becomes a true commodity. But once you're retired, you're suddenly left with a lot more free time on your hands, and while that can certainly be a welcome change, it can also have some drawbacks. Firstly, there is such a thing as too much free time. With people living longer these days, 20-year retirements are becoming more of a norm -- and 20 years is a long period to occupy. Secondly, keeping yourself entertained can come at a cost, yet more than half of retirees fail to budget for leisure expenses in retirement. And even when you factor in perks like early-bird specials and senior discounts, the price of entertainment can quickly eat away at your limited budget. That's why starting a business is a smart thing to do in retirement. If your business is something you're passionate about, you'll be tempted to sink a number of hours into it each week, which can be a very fulfilling way to keep yourself busy.
3. There's less downside and risk
It's hard to take the plunge into self-employment when you have a family counting on you for financial support. But once you're retired and presumably getting by on Social Security and whatever savings you've amassed, starting your own business becomes much less risky -- provided, of course, that you don't need to invest too much up-front capital to get started. But as long as you don't deplete or even heavily dip into your savings in the process, there's really not much of a downside, especially if you're not counting on the income your business generates. Rather, that cash can serve as a nice source of bonus money to use for things like travel, leisure, and extra gifts for the grandkids.
4. It may even be good for your health
Starting a business in retirement can be a wise move financially, but it may also end up improving your health. According to research by the Institute of Economic Affairs, retirement increases the probability of suffering from clinical depression and being diagnosed with a physical illness by about 40% and 60%, respectively. Additional research confirms that mental functioning can decline if the brain isn't stimulated, in which case running your own business can serve the very important function of keeping you alert and engaged from a cognitive perspective. Furthermore, the less bored you are in retirement, the less likely you are to fall victim to depression -- which means that working just a few hours each week could work wonders for your overall wellbeing.
Starting a business in retirement can be rewarding on many levels, so if you have an idea floating around in your mind, now's your opportunity to pursue it. Best of all, once your business gets off the ground, you get to call the shots. Want to put in five hours a week? Go ahead. Need to turn down business because the grandkids are visiting? It's your call. Starting a business means finally getting to work on your own terms, so you really do have little to lose and a whole lot of benefits to gain.