More older entrepreneurs are starting businesses, many times after they've worked and retired from other careers. USA TODAY's Rodney Brooks talks advice and perspective with Deborah Banda, interim vice president for education and outreach/financial security at AARP.
Q: What is an encore entrepreneur?
A: An encore entrepreneur is someone over the age of 50 who starts a small business as a new career. Many encores start a business that meets a social need such as a non-profit that provides skills training for the unemployed. Others turn a hobby or passion into an income stream. Some encores start their businesses on the side while winding down their first careers. Others do so after "retiring" from their wage or salary positions.
Q: What's the greatest challenge that prospective older entrepreneurs have in starting a new business?
A: Their challenges are not much different than the challenges faced by entrepreneurs of any age: securing funding, marketing their business, developing their product. But older entrepreneurs have the wisdom and experience that come from decades in the workforce, and that's a huge plus for them.
RETIREMENT: Planning for your future
Q: Why is it that older persons are starting small businesses in greater numbers than younger people?
A: Two main reasons — for many older workers who lost their wage or salary position in the recession and haven't been able to land a new job, starting their own business provides much needed income. But for some people, it's a matter of finally turning a dream into reality. People are living longer and healthier lives, and they view traditional retirement years as an opportunity to stay active, grow and do something they've always dreamed of. What we're seeing with encore entrepreneurs is just a part of how Baby Boomers are reinventing retirement in this country.
Q: Starting a small business at any age is a risk. Is it riskier for older people?
A: It is riskier if they make the huge mistake of funding the business with their retirement savings. If that business fails, their nest egg goes with it, and that's a recipe for a very uncomfortable retirement, as they don't have as much time as a younger person to rebuild those savings. Therefore, we strongly discourage older persons from using their retirement savings to finance a small business.
Q: What are some of the AARP resources to assist those considering entrepreneurship (or self employment)?
A: AARP is working with the Small Business Administration to provide information and resources to help older persons start or grow a small business. In fact, we're doing events nationwide in April; we call it "National Encore Entrepreneur Mentor Month." For more information, go to www.aarp.org/startabusiness.