There are many compelling reasons to operate a small business in retirement. It’s a great use of your time, a productive way to keep your mind sharp, and a gateway to financial opportunity.
Going from working every day to doing nothing may sound appealing, but in reality, it turns out to be a shock for most people. For someone who has worked their entire life, the adjustment is often too harsh.
Whether on track for financial independence and early retirement or exiting the workforce around age 65, retirement just might feel like having nothing to do. Many of our clients solve the “too much time” problem with a small business, one that has the benefit of added income.
So, aside from giving you something to do to fill the time, let’s talk about three top reasons to consider starting a business in retirement.
Reason #1: Keep Your Mind Sharp
Having a small business is also a great thing to occupy your mind. Focusing the mind on a healthy and positive routine can prevent it from wandering toward more destructive patterns.
For example, some individuals are tempted to spend indulgently in early retirement. Often, this is a byproduct of simple boredom. This boredom can be eradicated entirely by operating a small business based on a hobby or talent.
Reason #2: Mitigate Financial Risks
With your basic needs covered, retirement is an ideal time to experiment with how you invest and generate long-term income. Operating a small business is one great way to engage in both activities at once.
One common question investors have is how to get started. It’s simple: Identify an idea, service, or product (whether your own or someone else’s) that resonates with you. Some investors who want to start small will capitalize on a hobby, like the investor we know who creates fishing lures and sells them to his fellow fishermen.
Understand that there are ways to determine how much risk you will tolerate, and operate within those margins. It’s OK, and even recommended, to know going into any kind of investment how much you’re willing to risk and under what circumstances.
Reason #3: Generate Extra Income
A little extra money is one obvious reason to keep a business going in retirement. But it is true that a little more income can contribute substantially to your quality of life. What that looks like will be a little bit different for everyone, but for most of us, it’s some variation of freedom.
The Bottom Line
Starting a new business may not be a part of your retirement plan. But it’s never too late to start something new. Just make sure you get the help you need from legal and tax professionals. We advise our own clients on these matters often.
What’s your plan upon retiring? How will you fill your days, and will you aim to continue actively producing income?