Retirement today is either something that people welcome, or dread. In the UK, the age to qualify for your pension seems to move further away with successive governments. And with no statutory retirement age in the UK, if you want to and your company agrees, you can keep working for as long as you like. Do you want to continue with your employment is the question many are asking. A realistic alternative is to start your own micro business.
As the cost of living continues to rise, many in the over 60 age group in particular are looking for alternative ways to make ends meet. But also, how they can take more control of their lives by creating portfolio careers or, starting micro businesses.
The gig economy continues to expand. This fledgling working environment continues to define its rules of engagement, but for many, the gig economy has opened a new avenue to earn an income on their terms. In their report ‘Gig Economy Workers and the Future of Retirement’, Betterment found that 16% of Americans plan to take a gig job in their retirement. Similar numbers are likely in the UK.
As a micro business owner, I have no intention of retiring, but using my business in a different way: At the moment my business is based around my skills. However, over the next decade, I will transition the business so that I can take more of a strategic role with day-to-day operations carried out by someone else. This is one way a micro business can ensure you have a comfortable retirement.
The other approach for anyone that is thinking of winding down their working lives, or that want to make a change, is to start a new micro business now.
Developing this enterprise over the next few years could lead to a healthy second income that could supplant the money you will have available if you do fully retire. This is the approach many over 60s are taking as they often top surveys of new business owners. Indeed, the concept of the ‘olderpreneur’ is fast becoming the norm, outstripping the often-quoted Millennial group, as the most entrepreneurial.
In the ‘Age of the Older Entrepreneur’ The IoD (Institute of Directors) concluded:
“Labour markets are changing. Increasingly sophisticated (and ever cheaper) consumer technologies are opening up routes into work for many who have traditionally felt locked out of the jobs landscape. For many older people in particular, this trend has the potential to facilitate flexible access to work as they transition out of full-time jobs and into retirement.”
Silver workers
Starting a new business is clearly no to be taken lightly. However, the cost of access to the tools needed has continued to fall. The digital channels have delivered a mass of opportunity. Couple this with an alignment with older people wanting to try their hand in business, you suddenly have a perfect storm that could be to your advantage.
According to the 2015 Kauffman Foundation's State of Entrepreneurship Address the financial issues that the Millennial group continue to feel post-recession, means a new group is needed to fuel entrepreneurial growth. That group could be the Boomers.
As the USA has the largest group of micro business owners and, has a population that that will see over 60s numbering 98 million by 2060 according to the Population Reference Bureau, I wanted to see whether the drive for more self-employment is tangible and whether this experience would repeat in the UK.
Marion McGovern is the author of ‘Thriving in the Gig Economy.’ I began by asking Marion is the Gig Economy a real and tangible alternative to retirement?
“First of all, the ‘Gig Economy’ is not new,” Marion stated. “Independent work has been around for a long time. I started a company in 1988 to match independent consultants to projects. It thrived because even before the advent of digital talent platforms there was both supply and demand. People see it as a new trend, because of the sophisticated technology that has been applied to making markets in talent.
“With that as a preamble, more senior workers have been doing independent work for a long time. It was only in 2016, that the Millennials surpassed the Boomers as the largest cohort in the world of independent work according to the 2017 State of Independence in America, a report put out annually by MBO Partners, a firm that provides back office services for independent consultants including becoming the employer of record.
“With Boomers retiring at a record pace, it is expected that many of them will continue their independent work. Some experts, like Deloitte Consulting, refer to this as ‘the Longevity Dividend’ , where careers are lasting 60 or 70 years, rather than the 40-50 two generations ago.
“There are two distinct paths here: One is the continuation of an existing career through part-time consulting in retirement. The second is those retirees who seek to earn additional income though the Gig Economy in pursuits that are unrelated to their career and/or expertise. It’s vital though to state these two gig paths are not so much an alternative to retirement but an augmentation of retirement, enabling higher retirement income. It would be inappropriate to suggest that individuals need not save for retirement, because the Gig Economy would allow them to continue to earn income. What is a bonus, however, is the supplementary income retirees have been able to earn from these approaches.”
The over 60s seem to be more entrepreneurial than any other group. Do they have the motivation and skillset to start their own businesses?
“Motivations for working longer into retirement vary. There are still a number of people who are working to rebuild the retirement savings lost in the financial crisis ten years ago. Many who had thought they would be retired and carefree now find themselves in a position where some level of work is needed to replenish those lost savings. Similarly, my surmise is that in high cost of living locations, like the San Francisco Bay Area where I live, supplemental income from gig work helps maintain a lifestyle that could be stressed on a retirement income. Similarly, the new tax bill means that retirees in high property tax states, like California and Connecticut, will have a higher tax bill then they had before the new bill, adding to their cost of living.”
What are the pitfalls to watch out for if you intend to start your own micro business in semi or full retirement?
“For those doing the B2B, consulting play, the pitfalls are the same as any business – do you have a product the market wants? If yes, will the income be enough to sustain me? For retirees, the amount of income they seek to earn, may be less than what a Gen Xer or Millennial would want, since theoretically, it is supplementing other retirement income. Issues that are complex for a younger cohort, may be less so for retirees over 65. Access to health benefits, for example, which is an issue for many independent workers, is less of an issue for those eligible for Medicare.”
What do you think the future of work looks like? More micro business ownership and gig working?
“I think, the empowerment that comes from independent work will continue. Regarding Boomers and retirees, I think the talent shortage may force many companies to recognize the value of Boomer expertise and welcome the notion of project contributions. Chip Conley, the Founder of Joie de Vivre Hotels and later an advisor at AirBnB, is promoting the idea of ‘Modern Elders’ , and the role they can play in helping to grow young organizations.
“However, as with many things, the policy side has not kept pace with the social adoption of the trend. Regulations around independent contractors and employees may constrain growth. New York City just put a limit on Uber and Lyft drivers today. Despite that though, it is a trend that shows no sign of abating, as 67% of companies say that external workers, independent workers or gig workers—whatever term you use are critical to their operations. Similarly, 63% of the independent workers are working that way by choice, and that is a ratio that has been holding steady. It seems, therefore, like supply and demand will still remain strong.”
New retirement
For those that can’t completely retire perhaps for economic reasons, or those that want to keep working – but on their terms – today you have a vast choice of options: The Gig Economy is rapidly changing what it means to work, in many ways moving the power away from management and into the hands of the workers themselves.
Starting a micro business does not require large financial investments. Staying small has its advantages, as you stay in control. The low-cost digital tools available are diverse and accessible.
That business idea you may have had in your 20s could become how you have an exciting and financially stable old age. And if you have had a light-bulb moment and think you have a great idea for a new business, your age has nothing to do with your ability to test that idea and perhaps start a world-beating enterprise.
