The Dirty Little (Encouraging) Secret About Entrepreneurs

OnYourOwnIt is often assumed that the most successful entrepreneurs in American society are young go-getters willing to take the ultimate risk and start a new business. Well you can substitute the word "youthful" for "young," because it turns out that middle-aged entrepreneurs are more successful than those who are young. Startling to some (perhaps including Boomers), this was demonstrated in a research study conducted this year. "Age and High-Growth Entrepreneurship," a paper written by Pierre Azoulay (MIT), Benjamin F. Jones (Northwestern University), J. Daniel Kim (MIT), and Javier Miranda (U.S. Census Bureau) arrives at the following conclusion:

"Our primary finding is that successful entrepreneurs are middle-aged, not young. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0. The findings are broadly similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs."

This conclusion is based on Census Bureau data used to study the ages of founders of growth-oriented start-ups in the past decade.

The authors of the paper write that "all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged." They go on to say, quite specifically, that "Conditional on starting a firm, a 50-year-old founder is 1.8 times more likely to achieve uppertail growth than a 30-year-old founder. Founders in their early 20s have the lowest likelihood of successful exit or creating a 1 in 1,000 top growth firm."

There can be no doubt about what the research discovered: "We find that age indeed predicts success, and sharply, but in the opposite way that many observers and investors propose. The highest success rates in entrepreneurship come from founders in middle age and beyond."

When you think about it, of course, this makes perfect sense. Why wouldn't someone with greater maturity and deeper business experience be more successful as an entrepreneur?

Still, the research paper, which you can access via the link above, might be useful to you in convincing friends, family, and financial lenders that you can succeed at doing your own thing! This research should be very encouraging to any Boomer who wants to start a business. Not only is it possible for you to do so, the evidence points to the fact that you are likely to be more successful than younger entrepreneurs, despite the typical perception. 


What if You Haven't Saved Enough for Retirement?

MusingsIf you are in your fifties or even sixties and you haven't saved enough for retirement, you are in good company. More than 25 percent of Americans 55 years of age and older have saved less than $25,000, according to the Retirement Confidence Survey by EBRI (Employee Benefit Research Institute).

Writing for CNN Money, Walter Updegrave offers "3 ways to recover from a late start on retirement planning." The three ways are not a silver bullet, by any means, but they make a lot of sense: Very simply, (1) start saving right now, (2) stay employed longer, and (3) "be flexible and resourceful." Updegrave goes into detail about each of the three ways, offering sound advice. It is an article every under-funded Boomer should read.

Obviously, the later you started saving, the more you'll have to make up. Examining sources of income (including anticipated Social Security payments), understanding how to leverage your assets (such as your home), and reducing expenses will all be important in helping you cope.

Updegrave's conclusion is fair warning, but still hopeful. He writes: "I'm not saying it will be easy or that you can put yourself in the same position for retirement you would have been in had you saved throughout your career. But if you combine several of the steps I've outlined here — and keep an eye out for even more ways to generate more post-career income or lower your future expenses — you can still improve your chances of achieving a secure retirement."

 


Identifying Your Ideal Second Act

MediaMy colleague Nancy Collamer specializes in helping Boomers figure out their "second act." I like this concept because it implies Boomers are far from washed up; they have plenty left to be fulfilled and to give to the world. That's one of the reasons I named my blog "Happily Rewired," instead of "Retired."

I highly recommend that you visit Nancy's website, https://www.mylifestylecareer.com/, read her blog posts, check out her book Second-Act Careers, and sign up for her free email newsletter.

When you request the newsletter, you'll also receive a free gift, a workbook entitled "25 Questions to Help You Identify Your Second Act." In it, Nancy makes the point that you should always think about the "why" when you are considering "what" to do next. She gives these examples:

Which of my jobs did I enjoy the most? change the question to: Which of my jobs did I enjoy most - and why?

What were my greatest successes at work? change the question to: What were my greatest successes at work - and why?

What type of people do I like working with? change the question to: What type of people do I like working with - and why?

The workbook covers:

  • Values
  • Skills and Experiences
  • Strengths, Gifts and Talents
  • Hopes, Dreams and (Im)Possibilities

You'll find the workbook very helpful in guiding you toward the future you want.


Why 5 Years Before Retirement is a Key Time

MusingsEvery Boomer's definition of "retirement" is a little different, but we can all agree that it is a time when you need to be more prudent about your finances. That's why many financial experts and advisers believe the best time to start planning for retirement is five years beforehand. Writing for The New York Times, Peter Finch has assembled the advice of financial gurus into a helpful article he calls "Countdown to Retirement: A Five-Year Plan." 

Finch says that the five year mark "is a good time to take a look at your overall asset allocation... a balanced allocation of 50 percent stocks and 50 percent bonds is reasonable for someone expecting to live another 30 years or more." At three years, Finch recommends that we "put aside some time this year to contemplate what retirement will actually mean for you." With two years left before retirement, you should "lay the groundwork" for "some potentially big tax-saving opportunities" that could come your way when you retire. In the last year before retirement, it makes sense to evaluate whether you will continue to work and think about "ways to reduce spending." Also "take another look at your investment portfolio," writes Finch, to see if the savings you have will adequately fund your retirement. If so, "many advisers recommend pulling back on your stock holdings and adding cash and other short-term investments as your final day at work nears."

The nice aspect of Finch's article is that it offers advice from a number of sources and is organized year by year. Check it out here: https://www.nytimes.com/2018/07/06/business/retirement-five-year-plan.html


Tax Benefits for Self-Employed Boomers

OnYourOwnWhile there has been controversy surrounding recent tax legislation, it created what could be a boon for self-employed Boomers. The self-employed, contract workers, and freelancers stand to gain in a number of ways because of the way business deductions have been modified.

Writing for AARP, retirement expert Kerry Hannon does a good job of outlining the key tax benefits that may be available to you if you are self-employed, do contract work, or freelance. As with any such advice, though, everyone's situation is different and it always makes sense to consult a tax professional.

Hannon highlights a number of key areas and discusses them, including:

  • The qualified business income deduction: You could be eligible for a tax deduction of 20 percent as a sole proprietor or even if you are part of a partnership, own an LLC, or participate in an S corporation.
  • Higher standard deduction: A higher standard deduction may remove the need to itemize personal deductions.
  • Home office deduction: You could be eligible for a home office deduction (this existed before the new tax law went into effect).
  • New equipment write-off: You can potentially deduct a larger amount for new equipment.
  • Business expenses: Hannon writes that these are basically the same with a few new restrictions.
  • Medical expenses: The self-employed can deduct medical expenses, but the percentage allowed has actually gone down for 2018 and will go back up in 2019.
  • Education and training: Work-related education is deductible with some restrictions.
  • Automobile expenses: Mileage driven for business is deductible at a slightly higher per-mile rate in 2018.
  • Retirement savings: If you're 50 or older, and you don't have an employer retirement savings plan, you can put up to $6500 into a traditional IRA.

Hannon wisely recommends scrupulous book-keeping if you are self-employed. Read her informative article here: 
https://www.aarp.org/work/small-business/info-2018/freelancers-new-tax-bill.html


Retirees are More Frugal Than You Might Think

MusingsWith all the red flags being raised about retirement age Boomers saving inadequately and running out of money, it is comforting to read something positive about the frugality of retirees. Richard Eisenberg, Managing Editor of NextAvenue.org, a great resource for Boomers, reports on recent research by the Employee Benefit Research Institute (EBRI) and the Society of Actuaries (SOA).

EBRI looked at three groups of retirees: Those who retired with non-housing assets of $200,000 or less, from $200,000 to $500,000, and $500,000 or more. The third group, with the most assets, spent only about 12 percent of their assets after 19 to 20 years of retirement. The other two groups spent from 24 to 27 percent of assets during the same time period. These percentages suggest that retirees are more frugal than you might think. About one-third of all retirees actually had more assets after 18 years than when they first retired. However, 35 percent of retirees with $200,000 or less to begin with had less than 20 percent of their assets left after 18 years.

An SOA study of retirees over the age of 85 was also encouraging. Although it was limited to focus groups and not a quantitative survey, the study indicated that the majority of these retirees spent less than their income. Two looming concerns may play a large role in why retirees are watching their pennies. A 2017 study by the SOA indicated that more than half of retirees are worried about (1) healthcare costs and (2) long-term care costs. As much as three-quarters of pre-retirees are worried about these two cost factors as well.

While the research suggests positive outcomes for many Boomers, it goes without saying that Boomers thinking about retirement need to financially plan for their futures, ideally with the help of a financial planning advisor.

 


Boomers and the "Hot" Job Market

OntheClockWith the unemployment rate at its lowest point in 18 years, the job market is "sizzling hot," writes career/retirement coach Nancy Collamer. Reporting on a work conference sponsored by Indeed.com, Collamer heard that the job market is tight and talent is hard to find, although wages are generally not going up in keeping with the labor demand.

Still, a robust job market should be good news for Boomers, shouldn't it? Well, yes and no. On the positive side, a Boomer with experience in a field considered desirable by employers may have an easier time than ever securing a part-time or full-time position. On the negative side, there is still plenty of age discrimination, and there is little Boomers can do about it. The fact is employers can interview all they want for an open position, and once they have several candidates available, more often than not they will pick younger over older.

Dust off your resume if you're in a job that you'd like to leave, or if you want to re-enter the workforce. If an employer cannot fill a position and your background and experience are an excellent fit, the market is such that you could be offered a full-time position. Keep in mind, however, that your salary expectations may have to be adjusted. Also, there is always the possibility that you can work part-time or become a contract worker if you don't want a full-time position or, at the very least, you may be able to negotiate flexible hours.

Interestingly, this might be an ideal time to see if your former employer needs help. In an article for The New York Times, Claudia Dreifus profiles several retirees who returned to work years after retiring because their employers had open positions they needed to fill. For example, a 60-year old registered nurse who retired was rehired by a hospital as a freelance nurse for 24 hours per week at a respectable $60 per hour.

A booming job market could be good for some Boomers -- but not for all. That's why it still makes a lot of sense to explore freelance work or self-employment as an option if you want to continue to work.


Two Helpful Resources: Eating Right and Moving

OntheHouseI'm pleased to say the "Happily Rewired" blog has attracted enough attention that I periodically receive unsolicited input that could be helpful to my readers. Here are two such resources that I think you will find of interest:

  1. A Senior's Guide to Healthy Eating
    The website "Nifty Benefits" has put together a helpful infographic. According to the creator Brenda Snow, "My goal with this guide is to help seniors live a fulfilling life, starting with a foundation of good nutrition. From the limitations that can cause seniors to have poor nutrition, to easy tips to incorporate healthy foods into your lifestyle or the lifestyle of your loved one, this guide has a lot of information that I hope will be valuable to you." The informative guide covers observing good basics and special considerations for older adults.
    Find it here: https://niftybenefits.com/seniors-guide-healthy-eating/
  2. The Senior Citizen's Guide to Moving
    The website "Hire a Helper" has created a comprehensive free guide to moving. The six helpful chapters are:
    - Popular moving options for seniors
    - Planning out your new home
    - How to downsize
    - The emotional impact of downsizing
    - Moving tips for senior citizens
    - Staying connected in a new city.
    Find it here: https://blog.hireahelper.com/senior-citizens-moving/

July Half Price Sale on Couples Business Book

LMMH book cover-jpg BooksIf you've ever thought about going into business with your spouse, you need to read Let's Make Money, Honey: The Couple's Guide to Starting a Service Business. The book has received excellent reviews from book reviewers and readers alike. It tells the story of how a Boomer couple started a small service business and sold it seven years later. You'll find plenty of advice about what to do and what not to do when starting a business with your spouse. Included are details about planning, financing, outfitting, and launching a service business, as well as operations, marketing, sales, customer service, and managing growth. Useful tools to help couples assess their business interests and business compatibility are also included. 

For the month of July only, Happily Rewired is offering the eBook edition of Let's Make Money, Honey: The Couple's Guide to Starting a Service Business at half price -- just $3.50 -- if you order it through Smashwords. You can get the book in any format for any device, including a PDF. 

To get your copy at half-price, simply go to: https://www.smashwords.com/books/view/568837  When you place your order, enter the code SSW50 and you'll pay just $3.50 instead of the regular price of $6.99. This offer is only good from July 1 through 31 at Smashwords so order today!


Insights About Retirement Worth Considering

MusingsHere's an intriguing question that was asked of retiree investors by the well-known mutual fund company, Vanguard: "If you had a do-over, what would you do differently to prepare for retirement?"

Vanguard received hundreds of answers to that question, and Matt Bell of The Balance highlighted some of the primary areas of concern. These areas provide important insights about retirement worth considering for Boomers, since they reflect the opinions of retirees who have already been through this stage of life.

Investing Earlier
A common theme was that retirees should have considered investing earlier than they did. They recognized that compounding works best over a long period of time.

Investment Decisions
Ill-informed investment decisions were another regret. Clearly, it pays to consider investment decisions wisely instead of risking assets on speculative investments. A related regret was investing too heavily in an employer's stock. When it comes to objective investment decisions, a financial advisor is an important resource.

Social Security
Retirees recognized that it may have been short-sighted to take Social Security payments too early. At the very least, waiting until "full retirement age," or age 70 if possible (when you receive the maximum Social Security monthly payout) makes a real difference in income in later years.

Understanding What Retirement Means
Retirees regretted concentrating on only the financial aspects of retirement. Just as important is the psychological impact of retirement. What you will do in retirement becomes a key challenge, one for which many retirees are unprepared.

Instead of second-guessing your retirement and being unprepared, think carefully about it and plan ahead!