Why So Many Boomers Are Launching Businesses

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U.S. NewsJeffrey Nash created the Juppy, a baby walker product.
By Kimberly Palmer

When Jeffrey Nash, 60, started thinking about his retirement several years ago, he didn't like what he saw. As a salesman for Men's Wearhouse, his income went up and down, and he hadn't yet saved much for retirement. In addition, he was struggling to pay off a mortgage at risk for default.

So Nash decided to build his own business outside of his full-time job. He created a baby walker product and started shopping it around at baby product conventions during his vacation time. His work paid off: Today, he runs his company full-time, and his Juppy has brought in more than $200,000 in revenue. Instead of worrying that he'll spend his retirement in poverty, he plans to continue growing and running his business over the next decade and beyond.

Nash is one of thousands of retirees and near-retirees who are becoming entrepreneurs, turning the traditional view of a laid-back retirement on its head. The Kauffman Foundation reports the 55- to 64-year-old age group represents almost one-quarter of new entrepreneurs in 2012, compared to just 14.3 percent in 1996. The cohort also has a higher level of entrepreneurial activity than the 20- to 34-year-old group.
U.S. NewsJeffrey Nash's Juppy baby walker


At a Congressional hearing in February, Elizabeth Isele, co-founder and CEO of SeniorEntrepreneurshipWorks.org, noted seniors are eager to learn more about how to leverage online technology to build businesses. Her efforts with her nonprofit have helped tens of thousands of seniors get "an expanded view of what's possible."

"We know the fastest-growing age group of folks who are starting their own business are boomers," says Debbie Banda, interim director of financial security for AARP. Seniors generally fall into one of two categories, she says: Those who are launching a new business because they need the money, and those who are looking for something interesting and satisfying to do during retirement. In the first category, she says, "They've been laid off during a recession, aren't finding a new job and see entrepreneurship as a way to start earning income again."

The second group is already relatively financially secure, but they expect to live a long life, and they don't want to just "sit on the porch and play golf," she says. "That group is looking into small business ownership as a second career."

This CEO Was 48 When She Launched Her Platform

While some boomers might need to update their technical prowess, as Isele teaches in her workshops, there are also some distinct benefits to launching a business at a more mature stage of life. Jules Pieri, co-founder and CEO of The Grommet, a product launch platform, says being an older entrepreneur (she launched The Grommet when she was 48) means she has a deeper support system to drawn on, as well as more diverse experiences. "I have past experience with the supply chain, new media, assessing technology and behavioral changes –- all that makes me understand business opportunities. Those are like muscles I developed in my career," she says.

"With the older entrepreneur, you also have your network and your wisdom," she adds. Since she has helped others out and made deep connections in the startup world over the last several decades, she can easily call on people today and set up meetings. "I'm also super-decisive. ... I can do that because I'm confident in my own decisions," Pieri says. She doubts she could have launched The Grommet as successfully as a 20-something. Plus, she says, her three sons are now grown, and don't need her as much as they did as toddlers.

Jean Setzfand, vice president of community engagement for AARP, notes there's also been a fundamental shift in the definition of retirement, as boomers no longer equate it with the end of work. In focus groups, she notes, boomers often talk about the expectation that they will always be working in some capacity. "Some people don't see retirement as a possibility, and they want to stay active and keep working," she says.

Retirement? What Does That Mean?

Indeed, an AARP report released in January, "Staying Ahead of the Curve," found that seven in 10 experienced workers plan to work during retirement, including 29 percent who plan to work part time for enjoyment, 23 percent who plan to work part time for the income and 13 percent who say they will start a new business or work for themselves.

Banda urges boomers considering launching a new business to stay away from financing it with retirement savings, like a 401(k). "Absolutely do not do that," she says. "Unlike a younger person, you have less time to recoup the losses if it doesn't work out." Other options include crowdfunding on sites such as Kickstarter or Indiegogo, local banks and loans backed by the Small Business Association.

Seeking a mentor can also help business owners in the beginning stages of entrepreneurship, Banda says. For example, the SBA Score program helps connect people with mentors. "A mentor is someone who is successful, who knows the ropes and who can help you figure out what kind of funding might be best for you and your business area and background," Banda adds.

The goal of many entrepreneurial boomers is to emulate Nash's example, and to turn a business idea into a fulfilling -– and lucrative –- retirement plan.

Kimberly Palmer is a senior editor for U.S. News Money. She is the author of the new book, "The Economy of You." You can follow her on Twitter @alphaconsumer, circle her on Google Plus or email her at kpalmer@usnews.com.

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Iselin007

When is the money becoming back from overseas? If it doesnt don't expect nothing but a lousy real economy because no money = no money.

May 05 2014 at 11:44 AM Report abuse -1 rate up rate down Reply
Iselin007

Even people with their own products have to have an army of people to protect their rights not sure anyone would want to do that late in life.

The economy has not hit bottom yet but it will. You can't play against the big guys especially with all those trillions of dollars sheltered off shore. Business is watching China declines because that's where their money is. They don't give a hoot about us.

May 05 2014 at 11:36 AM Report abuse -1 rate up rate down Reply
Iselin007

I knew a co-worker at Macy's/Bambergers in the 1970's that was so good at cards he quit to do it full time. This co-worker was making over six times what the store was paying him for 40 hours just by playing cards at the Casino.

May 05 2014 at 11:22 AM Report abuse rate up rate down Reply
Iselin007

I remember when people were told to create their own jobs on the Internet, suddenly there were multiple stores on ebay hawking similar stuff. Existing brick and mortar shops like Guitar stores were posing as customers trying to low bid sellers in scheme to get your rare guitar dirt cheap for resale!

After a while you realize the professional store people were using psychological tactics to make you sell at a loss. Some buyers would turn around just a few days later an have your item on the auction block for almost twice the price!

May 05 2014 at 11:04 AM Report abuse rate up rate down Reply
toosmart4u

Everyone cannot be as lucky. That is why we should save as much as we can to help out our social security account. Social security and medicare are 2 fine programs for our retirement. Now the Affordable healthcare act will be too for us to pick up health insurance for the 20% medicare does not cover.

May 05 2014 at 10:57 AM Report abuse +1 rate up rate down Reply
1 reply to toosmart4u's comment
kitharris1

2 fine programs for who? you have to be kidding, had that money been invested wisely you would have at least 3 times the benefits provided by medicare and social security. the government spent the money for both medicare and and social security and all they have left is a bucket of IOU'S AND A NATIONAL DEBT OF 17 TRILLION..

May 05 2014 at 1:14 PM Report abuse -2 rate up rate down Reply
dubricus

My accountant specializes in small-business start-ups. He said that 8 out of 10 fail in the 1st 5 years. 5 are gone in the 1st year. All entrepreneurs underestimate the cost, time, & toll it takes on relationships. They overestimate demand & support of family & friends. However, an added factor for older entrepreneurs is the toll the stress can take on their health... & the most underestimated factor is the health of the spouse. This happened to my cousin who has a landscaping business in NJ. He handed over day to day operations of the landscaping business to his brother & nephew. He wanted to start a new business growing annual flowering plants for sale to local landscaping businesses & local, smaller gardening centers - to provide variety from the big box stores. The business would have several cycles of busy vs lull, which would allow him & his wife to travel. Year 1 went OK.... He worked out several problems & didn't lose much money. However, he found that he absolutely needed more space. So he was in the process of completely remodeling his basement to handle racks of seedlings & building a greenhouse on his property to handle the plants once they were moved out of the basement "nursery". Unfortunately, 2 weeks after she retired from teaching at age 62, his wife was diagnosed with Parkinson's. Early signs had not been noticed or had been attributed to something else. Her decline has been rapid... within 1 year, he's become a full-time caregiver. Fortunately, he had not yet invested huge amounts in the new greenhouse or the basement. It was not the type of business that could provide sufficient income for himself & his wife & have a paid employee, so the business is DOA.

May 05 2014 at 10:48 AM Report abuse +1 rate up rate down Reply
Iselin007

Good idea for the people that can.

May 05 2014 at 10:33 AM Report abuse +1 rate up rate down Reply
tmlbtb

I'm a baby boomer running our own business. It was this or stay where I was and put up with a**hole managers who are horrible people. They manage by bullying, because thay don't know any other way to do it. A bunch oy yes men who haven't a clue about getting the best out of their people. And my manager got laid off after I left. Tsk, tsk.

May 05 2014 at 10:24 AM Report abuse rate up rate down Reply
1 reply to tmlbtb's comment
Iselin007

Your right about the managers that bully.

May 05 2014 at 10:37 AM Report abuse rate up rate down Reply
exnyorker

ObamaCare is going to free up the economy.

So many people that have been suffering from "job lock"
(staying in a "corporate" job to have a group health insurance plan)
are feeling liberated- leaving those dead end careers in companies
to "free-lance".

This is a tremendous blessing for Americans
and the American economy as a whole.

May 05 2014 at 9:54 AM Report abuse +2 rate up rate down Reply
2 replies to exnyorker's comment
Iselin007

Too many people have been locked out of jobs which is wht the not in the labor force is growing. With too many businesses chasing fewer dollars somebody has to fold unfortunately.

May 05 2014 at 10:43 AM Report abuse rate up rate down Reply
kitharris1

subsidized health care insurance is a wonderful thing, unless you need it. once you pay your part of the insurance , the co-pay, and the deductible you are all set. but if you needed help paying for the insurance, chances are you'll need even more help paying your deductible and will lose your insurance unless the government charges everyone else more. when will those taxes ever stop, there aren't that many people left paying income taxes anymore.

May 05 2014 at 1:21 PM Report abuse rate up rate down Reply