A silver tsunami is about to hit the U.S. This is not from COVID-19. Instead, it is from the millions of Baby Boomers getting ready for retirement. However, many Baby Boomers have not saved up enough to pay for life after work. This is due to the combination of living longer, inflation (especially housing and health care costs), and the impact of the financial crisis in 2009 as well as the recession we are currently in the midst of.
As such, millions of Baby Boomers are starting home businesses to help pay for retirement. This allows many to take advantage of their experience and finally be the boss. While others are learning how to market themselves in an internet-driven world while making some extra cash. Either way, working retirements are becoming more common across the country, and here is why.
According to national surveys on small business owners, nearly half are Baby Boomers, with about twenty percent being over retirement age. While most of these entrepreneurs are men, a growing number are women who are seeking to ensure financial independence in retirement.
The states with the most Baby Boomer small business owners include Florida, California, Texas, North Carolina, and New York. While states such as Florida and North Carolina are popular retirement destinations, what is surprising is that many more are deciding to remain in their home states to start their businesses.
This gives them a chance to start their home-based businesses without relocating, which means they are closer to their friends and families. This is important as starting a home-based business can be grueling – especially in the beginning – and having a support network around can be a big help.
Another benefit is that they can tap into the equity they have built up in their homes over the years. While one way to do this is the use a home equity line to help finance a new business, some Baby Boomers are turning to reverse mortgages not only to get the money they need but also to improve their post-retirement cash flow.
This is because a reverse mortgage, unlike a traditional mortgage, does not require the borrower to repay the loan until the property is sold. While this type of loan is not for everyone, you can check out ARLOs reverse mortgage estimator to get a better understanding of how such a loan would help your retirement plans.
Now, if you are considering starting a home-based business as part of your retirement plans, you will want to keep in mind that every new business will face challenged. This is especially true in the post-COVID world were logistics, and customer needs have dramatically changed in just two months.
As such, your business should be something which will help to fit a need in during this time. Examples include cleaning services, delivery services, meal prep delivery services, and canned and jarred food companies, among others. Many companies in this sector are experiencing growth during the COVID crisis, and they can also be run from home, which helps to keep costs down when you are getting started.
Touching on a point would be entrepreneurs tend to forget – controlling costs. If your purpose for starting a home-based business is to provide extra capital to pay for retirement, then you want to make sure that the company is profitable.
This starts by making sure your business fills a customer need and that you have priced your product or services to cover your expenses. Speaking of expenses, you want to make sure that you keep them in check. This can start by making sure you are getting a return on your marketing costs as this is the single biggest driver to bring new customers to your business.
From there, you also want to make sure that keep your company’s finances separate from yours. Not only will this make it easier come tax time, but it will also give you peace of mind when trying to plan what resources you need to pay for your retirement. This is because you will be able to isolate what funds are coming for your business and where they are going.
Retiring in today’s America has a different meaning than it did just a decade today. As the silver tsunami of Baby Boomers reaches retirement age, more of them are deciding that now is the time to start a business of their own. In doing so, they are taking a step towards the type of financial independence needed to pay for retirement.
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