The Benefits of Starting a Business as a Senior — Why Retirement is the Perfect Time to Pursue Your Passion
The majority of retired workers who are looking to re-enter the workforce (60%), say that they’re simply “looking for something to do,” according to one Joblist survey. While retirement is typically seen as the time to enjoy life, starting a business that you’re passionate about can be a great way to do just that, especially when your schedule is free of work obligations. Whether you’re looking for a way to stay busy while putting your business ideas to use or you’re seeking a way to make some additional income, here’s what you should know before jumping in.
The value of starting a business
Regarding the benefits of starting a business as a retired individual, there are several to take into account. The Centers for Disease Control and Prevention (CDC), for instance, notes “Loneliness and social isolation in older adults are serious public health risks affecting a significant number of people in the United States and putting them at risk for dementia and other serious medical conditions.” To further highlight the health issues that can become involved, the CDC states that there is evidence to support that many individuals aged 50 and older are “socially isolated or lonely in ways that put their health at risk,” with recent studies having found that loneliness was associated with higher rates of depression, anxiety, and suicide. It’s also mentioned that “poor social relationships (characterized by social isolation or loneliness) was associated with a 29% increased risk of heart disease and a 32% increased risk of stroke.”
Reigniting a sense of purpose — something that retired individuals may encounter losing — can be another benefit of starting a business during retirement. Medical Alert notes that having a sense of purpose is crucial to seniors, as it can keep the brain active through engaging in things that involve the use of critical thinking and short term memory. Medical Alert further goes on to mention that there are several ways that seniors can increase their sense of purpose, such as being part of enjoyable activities, staying socially active, changing up your routine, and creating new things. For retired individuals who may miss working, starting a business that you’re passionate about can be the perfect way to achieve this, while also generating a stream of income. Going out and filing paperwork, organizing/attending business meetings, and actively working on various aspects of your business are just a few ways that starting a business can aid in leading a more social lifestyle despite being retired.
For seniors who already have an idea as to what they want their business to be, starting with forming an outline or plan is a great way to begin. Business News Daily notes that refining your idea by addressing the basics — such as brainstorming your business name and thinking about who your customers will be — is a great place to start. From there, creating a business plan is essential, and will help you to address important questions such as the purpose of your business, your end goals, and how you’ll finance your startup costs. Business News Daily further points out the importance of writing a business plan, stating that “A lot of mistakes are made by new businesses rushing into things without pondering these aspects of the business.” Other factors involved in writing a business plan, like conducting market research (in order to help you understand your target customer, the industry, and your competitors) and even considering an exit strategy are noted to be particularly important.
Considering different structure options
While writing your business plan involves various aspects that can aid in solidifying your initial idea, considering which legal structure is best for you and your business is essential. With common structures including sole proprietorship, partnership, corporations, and Limited Liability Company (LLC), exploring the pros and cons of each is a great place to start when determining which will suit your needs best. For example, advantages of sole proprietorship include having complete control as the sole owner, an easier start up process, simple tax reporting, and privacy, according to Indeed. However this structure may not be for everyone, as you’ll be “personally liable for all of the business’s financial obligations such as debt and losses.” LLCs, on the other hand bring the advantage of limited liability, meaning your personal assets will be protected in the event that your company is sued.
For those looking into forming an LLC, the fees and costs involved will vary from state to state. For example, Nolo.com notes that while LLC filing fees in Hawaii are $50, and $90 in the state of California, those in Massachusetts can expect to encounter a filing fee of $500 (Nolo also lists varying ‘ongoing LLC fees’ for each state, and also explains that other costs, such as a professional registered agent, should be expected as well). If you do opt for silicon valley, to begin the process of starting an LLC in California, you’ll need to ensure that your desired name is available, select a Registered Agent, and file the proper paperwork — called Articles of Organization (which is currently free to file until June of 2023). Additional steps include getting an LLC operating agreement, applying for your tax ID number (EIN), and filing an Initial Statement of Information. Paying an annual franchise tax and estimated fee every year (which is $800 in California) is another consideration involved when looking into forming an LLC as well, and you may need to obtain certain business licenses or permits depending on your industry and location.
Starting a business during retirement may sound like an impossible feat, especially since retirement is often seen as the time to relax, though starting a business as a senior can be a great way to finally pursue a long lived passion, stay active, and generate income. With a comprehensive business plan and thinking through the logistics — including which business structure is best for you — you can get to work in setting the foundations for success.