The 60-Something Entrepreneur: Can a Start-Up Pay for Retirement?

Baby boomers who thought they were on the cusp of retirement have suffered more than any other group in America. Here's one way to fight back: Start a company.

Baby boomers who thought they were on the cusp of retirement have suffered more than any other group in America. Here's one way to fight back: Start a company.

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Reuters

It's rare for couples these days to stick together for as long as John and Patsy McArthur have. Both now 63, they met in high school in rural Red Springs, N.C., and never ventured far. In their 45 years together, they have run a farm and, since 1987, a contracting business. As recently as 2008, when the housing market was booming, annual revenues of their 60-employee McArthur Construction topped $14 million. This got the McArthurs thinking about selling their company and using the proceeds to ease into retirement, figuring to travel and spend more time with their grandchildren.

 

Oops. That was before the bottom fell out of the real-estate market. When it did, the McArthurs quickly sold some equipment, paid down debt, and scaled back their payroll by cutting the staff to 45. They closed their office in Charlotte, where the building boom had gone bust, and moved the business back near home, where rent and land cost less. "We kept bidding all the time on new projects, but we had to cut our profit margin to the bone," John Mc-Arthur said.

While many of their peers in construction were forced out of business, the McArthurs were fortunate to weather the Great Recession better than most. But not without cost: Their dream of selling their business and retiring has been put off. Indefinitely.

"When you put every penny you have into building a business whose value then disappears, living on a beach doesn't seem as important anymore," Patsy McArthur explained. "That's the tragedy of what's happened in small-business America. So many business owners don't have dreams--about retirement or otherwise--anymore."

It's not news that the collapse of the stock and real-estate markets starting in 2008 played havoc with the financial wherewithal of most Americans. Not that Americans have typically been all that good at saving anyway. According to a 2010 study by Boston College's Center for Retirement Research, the shortfall between what 32-to-64-year-olds need to retire and what they'll actually have when they reach the traditional retirement age of 65 amounts to some $6.6 trillion. That's an average of $90,000 per household.

Baby boomers who thought they were on the cusp of retirement have probably suffered the worst. A survey conducted recently by AARP of people age 50 and older found that a third of them planned to delay their retirement and another 44 percent expected to work at least part-time past age 65.

"Certainly my views on retirement have changed, especially since the economic downturn," said Linda Rink, 60, a self-employed market-research analyst in Philadelphia. "I will not receive large pensions from former employers, and my expectations from Social Security are not large either, given my erratic pay history. So retirement seems like a joke these days. In fact, I joke to my fellow baby-boomer friends that I expect to be working 'in my walker.' "

Presented by

Darren Dahl

Dahl is a contributing editor to Inc. magazine and a business writer in North Carolina.

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