This post is part of our series for advisors to pass to their clients. Knowing more about your clients’ needs will help you to better serve them. Aging doesn’t have to be scary, and we here at Ashar want to help you provide the resources that policy sellers need to flourish in this chapter of their lives.
It might seem paradoxical, but more and more Baby Boomers are using their retirement to get back into the workforce. But this time, it’s as business owners, rather than as someone else’s employee.
While for some people, a perfect retirement means tons of free time, long vacations, and not a whole lot else, others find that the retirement they’d always planned isn’t quite as fulfilling as they expected. For people who like to stay busy and productive, spending days reading, visiting with friends, or planning their next trip sometimes isn’t enough.
Starting a small business can be the perfect antidote to retirement boredom. Such an undertaking can present a brand new challenge, as well as an opportunity to learn new things, meet new people, and develop new skills.
And while the process for starting a business is much the same as it is for any entrepreneur of any age, there are a few things that retirees should keep in mind when they start down this path.
- Make sure you’re protecting your retirement assets. You’ve been putting money into your retirement fund for the past 30 years for a reason—the last thing you should be doing is throwing all of it into a new business. Starting a business is inherently a risky proposition (which is also part of what makes it so exciting), so you must make sure that you’re protecting whatever assets you’ll need to continue living in retirement should this business fail.
One option for generating extra income to put toward a new business is to sell your unneeded life insurance policy on the Secondary Market, as a life settlement—this can provide you with a lump sum of cash that you can then do whatever you like with. It’s usually many times greater than the cash surrender value of your policy, too.
- Make sure there’s a real need for what you’re selling or providing. This may be a second career, but that doesn’t mean you should treat it as a hobby. If a hobby’s what you want, that’s what you should pursue! Starting a business is something that requires a lot of thought, research, and soul-searching.
Once you’ve come up with your idea, it’s essential to take a look around and ask yourself whether people need or want what you’ll be offering. Do you want to open a bed-and-breakfast? If there are 12 other B&Bs within 20 miles, you might want to rethink your idea, and just apply for a job with one of the existing ones.
- Take advantage of entrepreneur resources. As a retiree, you’ve spent your working life meeting people, networking, and making contacts. Now is the time to revisit those relationships—chances are, most people you get in touch with will be happy to offer you helpful advice. If you know of someone who’s started a business themselves, take them out for coffee and ask about their experiences. Doing so may help you avoid a costly mistake down the road.
And don’t forget about organizations that offer resources for new business owners. Many Chambers of Commerce and other local groups host lots of free events for entrepreneurs, from one-hour info sessions to networking get-togethers.
- Be honest with yourself about the amount of time you want to commit. Let’s face it: working a full 40 hours a week, or more, probably isn’t the retirement you’d imagined, no matter how much you like to stay busy. Some businesses are notorious for taking up every minute of the owner’s time—restaurants, for example. Is that something you want to jump into right after you’ve left your first career?
One thing to consider is to avoid opening businesses that require brick-and-mortar locations. That way, you can give as much time as you want to the business without having it consume you. But if you do want to open a physical location, options like a breakfast café, with mainly morning hours, or a small retail business that’s open just a few days a week can be good ideas.
Retirement can be a great time to fulfill your dream of starting a small business. As long as you’re careful with your savings, and approach the endeavor as seriously as you would during your working years, becoming an entrepreneur can add fun, meaning, and excitement to your encore years. If you think a life settlement could help you move toward that goal, ask your financial advisor to contact Ashar today!