Should you start your own businesses at 50+ years?
FOR an ever increasing number of Australians the dream of retiring at 65, hitching up the caravan and touring the country side is becoming just that, a dream.
Figures from the Australian Bureau of Statistics indicate that one in five Australians more than 45 years of age are planning to continue working up to their 70th birthday.
But what is this working future going to look like? Will it be full time employment or part time work to top up retirement savings?
What we do know is that retirement is no longer the destination it used to be.
When the pension was introduced in 1908 it was never intended to be a future fund. In fact, most people's futures were quite short with life expectancy between 55 and 65 years of age. Now we are living well beyond 80 but our finances are struggling to keep up.
So where to now for the hundreds of thousands of Australians heading towards 'retirement' without the financial backing to keep them afloat?
A growing number of people more than 50 years of age are now putting their skills and experience to use in their own businesses, becoming senior entrepreneurs or SeniorPreneurs to supplement their retirement income.
In the 2011-12 financial year, almost 600,000 small business owners were 55 years of age and over, In the same period, 35 per cent of all new small businesses were started by seniors.
Men and women born before 1965 have spent a lifetime developing skills and expertise, building networks and figuring out that all important work/life balance. Why put that to waste just because you hit an arbitrary number?
What type of business you choose is limited only by your imagination but here are a few things you should consider if you're thinking about a foray into the world as a senior entrepreneur:
1. What do you love doing?
Find ways to be involved in doing the things you love. Follow your passion and aim to reap rewards on all levels: financially, mentally and emotionally. Working on something that interests you personally can be more sustainable and rewarding because a labour of love doesn't feel like work.
2. Find like-minded people
Find people who share your interests regardless of any age differences. Discussing ideas with people experienced in the areas you may not be familiar with can lift your ideas from the drawing board into reality, without you having to pay for expensive mistakes.
Consider contacting organisations like the SeniorPreneurs Foundation or Elderberry-groups like these can help you connect with other people who are forging ahead to become their own boss. You can also go to the Queensland Government business website for more tips and tricks on setting up a small business.
3. Make your workspace fit your lifestyle
Many small businesses are run out of spare rooms, garages and sheds. In today's online world there is no need to go to great expense renting space to start your business. Just make sure you check you're not breaking any local regulations before you fire up the furnace in the back yard.
4. Be clear on your objective
If your goal is simply to earn enough to allow you to be financially independent in retirement, there is little point racking up huge debt to fund the venture. Before you jump in with both feet consider your current financial position:
* How much do you need to 'earn' to maintain a comfortable retirement?
* How much can you earn before you impact any Government entitlements you may be getting or could be eligible for in the future?
* What will be the best strategy for your Superannuation payout?
5. Financing your venture
There are a number of strategies you can use to fund your new venture, such as redrawing on your mortgage or taking out a small loan. Alternatively, there may be grants available. Again, before pursuing any of these options it's worth seeking guidance from a financial adviser.
After all, the idea of setting up a small business at this stage of your life is to provide for the luxuries of life, not to earn enough to repay debt.
Ultimately your 'retirement' is what you make of it. It doesn't necessarily mean you stop working, it just means having the freedom to do what you want to do, when, where and how you want to do it.
Whatever your financial goals and individual circumstances there is always something you can improve on or build up. Seeing a good financial planner is a great place to start.
(Tony Rigby is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.)