According to Age UK, the number of self-employed people aged 65 and over has more than doubled in the past five years.

As the traditional cliff-edge retirement is increasingly replaced by a more flexible, phased approach, the opportunities – and options – for those of pensionable age have increased.

Using the skills and experience you have acquired throughout your career to start a new business in retirement can be a great way to receive extra income while keeping you active and engaged in a sector you understand.

Equally, you might look to follow your heart and set up a business based around a passion that has nothing to do with your former career.

Either way, starting a new career and going self-employed in retirement can be risky. Here’s how Expert Wealth can help you to include a new business venture in your retirement planning.

3 reasons to start your own business in retirement

Over-65s going self-employed in retirement are doing so for many different reasons. Here are three of them:

1. Flexibility

You can choose the hours you work and fit them around the retirement lifestyle you want. This might mean working part-time or even seasonally.

You might open a coffee shop or a driving school and work all year round. Equally, you might renovate your house and start a bed and breakfast at certain times of the year.

You could also use your experience and knowledge to become a freelance consultant, sharing your skills with others who need them, at a time that suits you.

2. To alleviate boredom

The challenges of starting a new business are a great way to keep mind and body occupied post-retirement.

For many people, missing the social side of working life – being out and about, meeting new people, and staying mentally active – is their main worry when considering a cliff-edge retirement.

Phased retirement is on the rise and starting your own business could allow you to make a smoother transition between your pre- and post-retirement careers while staying socially active.

3. To supplement your retirement income

A successful business can provide much-needed financial support in retirement.

While starting a business from scratch is a huge risk, if you have a retirement plan in place that allows for the initial outgoings, a successful business could provide the additional income you need to live comfortably in retirement.

Things to consider

Where will the money come from and how much will I need?

If starting your own business in retirement is a long-held dream, you might have been preparing financially for some time. Maybe you have investments or savings already set aside for just this purpose?

The likelihood is that at least some of your start-up capital will come from a business loan.

You’ll need to think carefully about initial start-up costs, and cashflow during the first few years of operation.

Putting together an in-depth business plan will give you the best chance of securing a bank loan (assuming your credit scores are good, and you have the necessary collateral).

If you don’t have sufficient savings to start your business and are unable to get a bank loan, you might consider other avenues, such as the Community Development Finance Institution, which look to create a fairer financial sector through supporting community development.

What are the potential tax implications?

Which? reports that almost a third (32%) of those working beyond State Pension Age are self-employed, compared to just 13% of younger workers.

You will still be able to receive a pension – you might consider deferring your State Pension if you don’t need it straight away – but you’ll need to think about the tax you pay and any other benefits that might be affected.

If you have been self-employed before, you will understand how to keep track of your business accounts and how to inform HMRC of any profit made. If you are entering self-employment for the first time, however, there is a lot to consider and much to learn. Financial advice can help.

Should I seek professional financial advice?

In short, yes. The rewards of starting a business in retirement can be huge. You have the opportunity to pursue a passion or use the knowledge built throughout your career to find a work-life balance that makes sense for you.

But it isn’t without its risks.

Expert Wealth can help you build a financial plan that aligns with your long-term goals and helps to make your business dreams a reality. This might mean a phased approach to retirement, helping to build capital, or providing the financial stability needed to successfully apply for a loan.

We can also stand by you at each step of the way, helping to ensure your business is run tax-efficiently and that your retirement is secure, however successful your business venture might be.

Get in touch

If you are thinking of going self-employed and starting a new business in retirement – or you’d like to discuss any aspect of your long-term retirement plans – get in touch and speak to one of our Chartered Financial Planners today.