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Self-Employment Risks

Posted Oct 23 2008 6:16pm

Older adults are drawn to self-employment for a variety of reasons.

Some are disenchanted after years in Corporate America and crave the autonomy of being their own boss.  Others see a chance to finally pursue a dream or hobby.  And some are driven by pure necessity: They need income and can't find other work.

Realitychecklogogig175_4 But many older entrepreneurs don't have the stamina or the desire to put in the long hours getting a business off the ground, and others can't afford to gamble a large chunk of their nest egg on a venture that may not pan out.  Some simply have a hard time starting over after working for others for so long.

Sara Rix, a senior policy adviser at AARP, says some older adults considering entrepreneurship should think twice.   "There's a risk of exhausting savings," she says.  "There's less time for a self-employed older worker to recover."

According to a 2003 AARP survey, about 15% of Baby Boomers expect to own businesses in retirement.   And that percentage is likely to grow as the workforce grays and as more adults say they want to keep working past typical retirement age.  "I think it's fair to say we'll see an increase in older entrepreneurs" in the next 10 years, says Ms. Rix.

The bottom line of self-employment: Many older adults who say they want to keep working past the normal retirement age won't be able to hold on to their corporate jobs.

Source: The Wall Street Journal, September 25, 2006

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