"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.' "
Yet, the prospect of landing a job in late middle age can be daunting, especially in a tight labor market. A popular solution: turning to entrepreneurship as a way to pay the bills. Americans ages 55 to 64 started some 10,000 businesses a month in 2007-08, more than any other age group, according to the entrepreneurship-focused Ewing Marion Kauffman Foundation, based in Kansas City, Mo. Altogether, an estimated 9 million of the nation's 15 million small-business owners were born before 1965. But even they aren't necessarily any closer to retiring. A perfect storm of sorts — a lack of credit, a depressed economy, and a glut of small businesses up for sale — has made it harder than ever for aging entrepreneurs to sell their companies to finance their post-employment years.
"I can tell you that, from my perspective, business owners who may have hoped to be out from under the grind — and risk — associated with ownership are indeed holding on to their businesses right now," said Barbara Taylor, cofounder of Synergy Business Services, a brokerage and valuation firm in Rogers, Ark. "Valuations are down, and credit markets remain tight. For many business owners, that means it's a bad time to sell, which means we may have business owners delaying retirement for quite some time."