How Recession Is Redefining Retirement

As hard as it might be for some to believe, the notion of retiring at the age of 65 or thereabouts is a fairly recent phenomenon.

In the United States, according to a 1999 New York Times article, "The History of Retirement, From Early Man to A.A.R.P.," the roots of the movement largely trace back to the Great Depression, when high levels of unemployment stirred efforts to encourage older workers to lay down their tools and allow those who were younger to take their place.

Under the circumstances, some might find it ironic -- or, perhaps, tragic -- that a similarly calamitous economic environment has spawned, as USA Today reveals in "For Boomers, Recession Is Redefining Retirement," a reversal of that decades-long trend.

They grew up during a time of cultural change, and now are being forced to redefine retirement at midlife.

The 77 million Americans in the Baby Boom generation face an economic storm: The Wall Street meltdown trampled their retirement nest eggs more than any other group. After losing jobs during what they thought would be some of their peak earning years, many are struggling to get back into the workforce. Health care costs are rising, and declining home values mean they might not be able to count on home equity to guarantee an easier retirement.

"This generation will be sobered by their experience," says John Coyne, president of Brinker Capital, an investment management firm. "They may not have as extravagant a vision of retirement as they did last July."

Meanwhile, a post at the New York Times' You're the Boss blog, "Recession Driving Start-Ups," highlights another interesting sign of the times: the expanding ranks of elderly entrepreneurs.

Source: Calculated from data on the Bureau of Labor Statistics Web site.

Self-employment rate by age in December 2008 and April 2009.

In the past couple of weeks, I have been contacted by reporters who were writing stories about the growth in the number of young entrepreneurs. Given the bleak job market facing young people, I guess it isn’t too surprising that attention is turning to youth entrepreneurship as we enter the summer job season.

But is it really young people who are shifting toward entrepreneurship during the recession? In search of an answer, I compared self-employment rates by age groups in December 2008 and April 2009. As the table shows, the numbers don’t suggest a big rise in entrepreneurship among young people over those months. Self-employment rates rose among people 16 to 19, but fell among those 20 to 24.

On the other hand, self-employment rose sharply among those 65 and older during that same period — almost two percentage points, from 16.3 to 18.2 percent. While the self-employment rate has been higher among people 65 and older for a while, the gap between the self-employment rate for the 65-plus age group and the next highest group (55 to 64) has grown.

Comments

[ShallieBey:]

This trend actually began before the recession. During sound times, Baby Boomers were expressing the desire to form businesses as an alternative to traditional retirement. This was because of the desire to remain active, rather than financial concerns.

Certainly, the financial loss and the shifting opportunities that come with the recession have drawn more people into the pool of aspiring baby boomer entrepreneurs. Also, baby boomers have additional pressures because of time that allows less learning by the seat of the pants. None the less, this is opening a new door and redefining concepts of retirement. Thanks for a great post.

Shallie Bey
Smarter Small Business Blog

Jun 18 03:20 PM

[swaps:]

This article really cuts through the b.s. and informs.
It would make sense that retirees would be entrepreneurs for they have a lifetime of experience and contacts to draw on. And shaped by the high consumption philosophy that guided them throughout life, it stands to reason they still want to acquire more so they can do more, have more, be more.
As for me, I woud rather have time than money and I will forego the rat race for at least a few more months. I really like sitting on the front porch on these cool summer mornings and watching the few cars drive by in this small town on this side street.. I read, sip coffee and watch the outdoor cats.
On one side of me is a man in his 50s. He's on disability and makes more than I was making as a newspaper editor. (If I had gone on disability years ago I would probably receive more money now than from Social Security). He also deals drugs on the side and the cops do not touch him as long as he does not sell outside of his network. Which does not include me, for I do not take drugs, prescription or otherwise, though I take vitamins and minerals and some homeopathic compounds. Buty I guess this guy on disability counts as an early retiree entrepreneur.
On the other side of me is a retired couple, Hispanic, who have a son in his 20s I guess who is on disability. They also have a lot of people from New Mexico or somewhere living with them off and on during the year, making the house look crowded some times.
My wife is in a nursing home, a quadraplegic ravaged by multiple sclerosis which flared up 20 years ago after taking government mandated tetatnus and hepatitius b shots. I mention that to show I am not relying on her second income to pay bills.
Across the street is a retired couple. Kitty corner to me across the street is a retired strore manager whose wife still works for the local bank, though she could retire this year if she wanted to but I guess willl not. Oh, he generates some off the books income through various wood working projects. Benches, lawn ornaments, bird houses, cat houses, that sort of thing. I have bought some.
His wife is the only one working a regular job out of these five households. And he has Social Security plus a company pension.
Without doing hard research, I would predict that the majority of senior citizen entrepreneurs live in highly urbanized areas where there are not only more opportunties to be entrepreneurial but high costs of living motivate them to find ways to make money.
What I left out were several older men around here who live on other blocks of the city or out in the country who are retirement age but they still feed livestock or do some farming. But these people never do really retire in the first place and their entreprenuerial job is something they've had all along.
I should get back to work and try to rebuild my ravaged IRA. But I sense if I do pad it some more then Wall Street will just ravage it again. They seem to treat all brokerage and mutual fund accounts as theirs for the taking. And we know how they do it. Getting the SEC to drop the uptick rule was like money from heaven for them. Though it was money from the masses. And that was just one of many ways they do it.

Jun 19 10:43 AM

[Ferdinand E...:]

Hmm, maybe I was lucky after all. I never stop telling people what a great teacher and researcher I am, but even so that background couldn't get me a job in the US. I suppose 50 universities had a chance to hire me, but they didn't. In fact they didn't even answer my letter asking about a job. One of my first students visited me, drank my whiskey, and in an intimidating voice asked me why I wasn't a professor at Brown. Why Brown? why did this moron think that Brown was my speed? When I told him I couldn't picture myself working in a university named after a color, he developed some attitude.

That was a long ago, and that gentleman of course has a university job in the US because he comes from a stone-age country and was a rotten student.

Jun 19 12:09 PM

[TinyTim:]

"the financial loss and the shifting opportunities that come with the recession have drawn more people into the pool of aspiring baby boomer entrepreneurs."

No doubt boomers have more experience to draw from in starting a business. It would be more interesting to drill down and see what kind of businesses these are and whether there are other employees.


By all accounts, the post boomer generations feel totally differently about employment. Particularly in the area of loyalty. Once you've experienced a bad boss or get screwed by your company, you never go back.

Jun 19 04:14 PM