Most Americans Want to Start a Business Rather Than Retire

Americans would rather start a business or keep working than retire

Rather than viewing retirement as a time to slow down, many Americans see it as an opportunity to engage in meaningful and fulfilling activities. This desire to stay in the workforce isn’t solely for financial reasons. Many hope to find a sense of purpose, which entrepreneurship can provide. According to Luke Pittaway, director of innovation at the Ohio University College of Business, the advantage of starting a business at this time of life is that retirement-age people “tend to bring more financial wealth, experience and personal networks to their startup efforts.”

Survey data suggests that many retirees feel this is true; 65 percent of Americans polled in the 2019 Inside Small Business survey said they want to open a business when they reach retirement. This demonstrates that these ambitions existed even before the COVID-19 pandemic, but the pandemic likely accelerated this trend as many people reassessed their career paths and financial plans. Some 60 percent of retirees and pre-retirees believe the ideal version of their golden years would include leisure and some work, according to an Edward Jones/Age Wave study.

Reasons Americans would rather start a business or keep working than retire

Several factors contribute to the desire among retirees to start a business or continue working.

Maintaining personal fulfillment and purpose

Many retirees find that continuing to work, especially in a field they’re passionate about, gives them a sense of accomplishment. That desire for personal fulfillment and purpose spurs people to start a business or find other employment. 

That value is a major concern for Americans, with 41 percent saying personal fulfillment is their main motivation for staying employed through retirement and 37 percent stating it’s to keep their sense of purpose, the Empower study found.

Staying mentally, socially and physically engaged

Staying mentally sharp and socially engaged has numerous benefits, making it a primary reason many people continue to work after they reach retirement age. That’s particularly important, as studies have shown that staying active and mentally stimulated can significantly enhance people’s quality of life during retirement. 

Additionally, retirees often bring a wealth of experience, knowledge and networks that can be invaluable to their newfound entrepreneurship. Their career-long accumulation of skills and insights can give them a competitive edge in business. 

Retirees are starting their own businesses or staying employed in some capacity because they find work benefits their health. In the Empower study, 37 percent of Americans said working helped keep their mind active, with 36 percent asserting it helped maintain their physicality. 

Ensuring financial security

Financial stability may not be people’s only motivation for continuing to work, but it remains on retirees’ minds. Postretirement income from a business or part-time work can help retirees manage expenses without dipping into retirement savings too soon. 

Having enough money to last through retirement is a pressing concern. Delaying Social Security benefits is one way to be more financially stable. Extending your income into retirement delays the need to draw down retirement account balances. It helps tide you over until you reach age 70 and can maximize your Social Security benefits.

The dream of owning a business in retirement

While there’s no specific best age to become a boss, more than half of U.S. small business owners are 50 or older, according to SCORE. Additionally, the Inside Small Business Survey showed that of all retirees chasing the entrepreneurial dream, 54 percent said the idea of succeeding and finding pride in their business is what excites them. [Read our step-by-step guide on how to start a business.] 

Community support for small businesses is often strong. The Inside Small Business Survey indicated that 70 percent of consumers like to support small businesses in their neighborhood. Tim Davis, president of WTD Consulting, said the survey’s findings show that even other small business owners “really want to help new business owners in their communities succeed.”

Pros and cons of starting a business or continuing to work vs. retiring

As with any significant life decision, there are both advantages and disadvantages of starting a business or continuing to work in retirement.

Pros of starting a business vs. retiring

Many people leaving the workforce contemplate continuing their professional life, either by consulting or starting their own business. Here are some of the benefits of this approach.

• Intellectual stimulation and social connection: Engaging in work or a business keeps retirees mentally sharp and socially connected.
• Financial benefits: Continued income can supplement retirement savings and delay the need to draw on Social Security.
• Personal accomplishment: Pursuing a passion or starting a business can provide a sense of purpose and achievement.
• Networking: Retirees can apply their extensive knowledge and connections when they network with employees in their new ventures.
• Flexibility: Running a business or working part-time allows for a balanced lifestyle, mixing professional and personal activities.
• Longer life expectancy: Pushing retirement back even just a year is linked with an 11 percent boost in life expectancy. As people live longer, Pittaway said, they increasingly look for ways to keep working in retirement, including maintaining a professional or entrepreneurial life. “People are living longer … and many are choosing to start a small business as a way to stay active,” he said. “In fact, the proportion of people starting businesses in the age range of 55 to 65 has increased in recent years and, at one point, even surpassed the typical entrepreneur age group of 25- to 35-year-olds.”

Cons of starting a business vs. retiring

After the economic fluctuations of the past few years, Americans have seen changes to their finances and retirement plans. Many have responded by rethinking their career paths, taking time off, or switching to freelance or independent work. Here are the cons of starting a business:

• Financial risk: Starting a business involves upfront costs and financial risk, which can be daunting for retirees. 
• Time commitment: Managing a business or job can be time-consuming and may interfere with the desired leisurely pace of retirement. Running a small business isn’t a typical 9-to-5 job.
• Stress and pressure: The responsibilities of running a business could lead to stress, potentially affecting your well-being and negating the health benefits of continued mental engagement. Even a small amount of stress can have an impact, and 57 percent of small business owners reported having high levels of stress, according to a Truist survey.
• Uncertain income: Business ventures may not guarantee steady income, posing financial planning challenges.
• New technologies: Retirees might need to learn and adapt to new technologies and market trends, which can be challenging.

Potential obstacles

As with any major life decision, outside forces can get in the way of starting a business. For more than a decade, many Americans have been reluctant to set up shop at their own expense, as they remember the 2008 recession and subsequent volatility in the marketplace.

One of the biggest hindrances to starting a small business is fear. Some concerns, according to a KeyBank survey, include compliance with laws and regulations (25 percent), fluctuating sales/revenue (35 percent), increased operating costs (37 percent) and payment fraud (44 percent).

New technology is also daunting for some entrepreneurs. In a Bipartisan Policy survey, 48 percent of small business owners said they aren’t sure what tools to use for artificial intelligence, such as those found in autonomous machines or automated customer support. Many people also said they lack digital skills (46 percent). However, as the learning curve flattens and technological literacy spreads, the horizon for innovation and growth appears brighter than ever.

Redefining retirement for the modern age

The traditional concept of retirement is undergoing a significant transformation. Rather than viewing retirement as a period of complete leisure and inactivity, many retirees are choosing to embark on entrepreneurial ventures or continue working. Retirees bring valuable experience, networks and a strong sense of purpose to their new endeavors, which lets them contribute positively to their communities and achieve a satisfying balance between work and leisure. 

While starting a business or continuing to work comes with challenges, the potential benefits include an enhanced quality of life and better financial stability. As people live longer and healthier lives, the pursuit of entrepreneurial dreams in retirement is likely to become an even more popular and rewarding choice.

Andrew Martins and Dock Treece contributed to this article. Source interviews were conducted for a previous version of this article.