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November 2017

Your Child as Your Business Partner

OnYourOwnFor some Boomers, the dream of owning a business is a family affair. I have first-hand knowledge of this: My wife and I started a small service business together after we left our professional careers. We wrote a book about it: Let's Make Money, Honey: The Couple's Guide to Starting a Service Business. While not all couples have the ability to work together, we found it to be a good fit for us and a great experience.

Here's a different spin on starting a family business: Taking the plunge with your adult child. A recent article in The New York Times explores this possibility and cites a few relevant examples of Boomers who made working with their children work. There are solid reasons such an arrangement can be successful. For one thing, Boomer parents seem to have better relationships with their adult children than previous generations. For another, adult children ages 18 to 34 are more likely to live in their parents' homes, making working together a natural next step.

There is a practical aspect to a parent-child business proposition, writes Christopher Farrell: "Age discrimination can be a major hurdle to employment for those 50 years and over. At the same time, young people can find it tough to land a job that’s engaging and offers a career path. For both age cohorts, starting a business can often be a better alternative." Another nice benefit: If the business is successful, the Boomer never has to worry about a succession plan; the adult child simply takes over when the Boomer is ready to retire.

A Boomer-adult child business relationship is just one more way Boomers are redefining our retirement years.

 


Is Consulting for You?

OnYourOwnI remember a time when a professional became a "consultant" for a brief period of time while looking for full-time work; sometimes, in fact, "consultant" was a code word on a resume for "on my own until something better comes along." Nowadays, however, consulting is not only a legitimate career path for the self-employed, it is also a viable second career for older professionals.

There are numerous potential benefits to becoming an independent consultant, not the least of which is the very word "independent." Benefits include the potential to earn high income, setting your own schedule, and re-purposing skills you already have and expertise you developed during your first career.

Still, consulting isn't a "slam dunk" for everyone. Writing for NextAvenue.org, Jonathan Dison, author of the book The Consulting Economy, has some sound advice for you before you consider plunging into the world of consulting. He talks about four lessons he wished he had learned before he became a consultant:

  1. Trust is everything
  2. Become indispensable
  3. Know the skills that are in demand
  4. Know your tax write-offs as a consultant

This article is a must-read if you're considering becoming a consultant. If you'd like a copy of Jonathan's book, you can purchase it directly from Amazon below.


Avoiding the Cash Crunch in Retirement

OnaWhimWhether you opt for part-time or full-time retirement, you'll realize very quickly that the lower your retirement income, the more you'll have to adjust your lifestyle. Americans are notorious for spending as much as, if not more than, they earn, which is why a majority of older Americans have simply not saved enough for retirement.

If you are not quite ready to retire but you're concerned about the adjustments it might mean to your lifestyle, one strategy you can follow is establishing a budget that constrains your expenses as if you're retired before you retire. The idea is to treat retirement as a kind of "test run," since your budget for expenses will ultimately have to mesh with retirement income that is likely to be quite a bit less than what you earn as a full-time employee. Living within a retirement budget before you actually retire could also give you some idea of what kinds of compromises you may have to make -- or what amount of income in addition to Social Security payments and retirement plan payouts you may have to earn if you want to maintain a certain lifestyle. One thing will probably be true for most retirees: your retirement budget will need to reflect the reality of reduced income.

Trey Smith offers a nice explanation of this strategy in an article he wrote for NextAvenue.org. For example, Smith discusses the need to isolate work-related expenses, which will be eliminated in retirement, and view all other expenses as personal expenses that can be adjusted. He also discusses expense areas that need special attention, such as car payments, housing costs, and travel. By carefully analyzing expenses and learning to live within a retirement-style budget while you're employed, Smith, says, "you’ll have a better understanding of whether you’ll need to make adjustments because you’ve seen what it’s like to live the retirement life."

Read the interesting reader comment below.