The world is changing for seniors, and they in turn are changing the world.
Today’s longevity is historically unique; there is no blueprint for what to do with an additional 20 to 30 years. Seniors around the globe are designing their ways into new lives, and the world is waking up to the economic impact of their experience.
Although the media continue to depict entrepreneurs as tech-savvy innovators in their early 20s, the Kauffman Index of Startup Activity identified that the highest rate of entrepreneurial activity in the US is among the 55 to 64 age group. This has been the case for the past 15 years, and the trend shows no sign of slowing down. In fact, in the US where about 10,000 people turn 65 each day and one in five Americans will be 65 or older by 2030, we will start to imagine entrepreneurs as most of them are: older, bolder, and wiser.
A 2014 Merrill Lynch study, Work in Retirement: Myths and Motivations, found people eschewing traditional retirement are three times more likely to be entrepreneurs and small-business builders than young people. These new entrepreneurs are optimizing their life and work experience to build everything from simple craft companies to multimillion-dollar technology businesses.
This makes the aging population the world’s largest, fastest-growing, and sustainable natural resource. Experience is a currency, and understanding how to catalyze it across sectors and generations is the new competitive advantage.
The advantage of senior entrepreneurship
Older and bolder entrepreneurs bring a unique value proposition to the table. Their experience of knowing what works and what doesn’t brings a huge advantage over those who’ve spent little time testing new ideas. Instead of approaching new problems with old solutions, their wealth of work and life experience can help teams discover new ways to make unlikely connections between ideas and insights.
This makes them particularly suited to succeed in our digital, Big Data, hyper-complex, Internet of Things world, not less. They are also incredibly resilient; they have failed in countless ways over a lifetime and have overcome many obstacles, and their understanding of how to weigh outcomes often translates into a higher tolerance for risk.
Senior entrepreneurship has two other significant economic impacts. First, there is evidence that older people who remain engaged in life stay healthier, thereby making fewer demands on social service and entitlement programs—in fact, as they work, they continue to contribute to social security and Medicare through their taxes. And perhaps most importantly, senior entrepreneurs are creating jobs for themselves and others—simultaneously boosting their local and our national economy.
Older entrepreneurs are therefore turning the negative stereotype of aging as a burden on its head. Here are some other outdated stereotypes they are busting:
- In the US, senior entrepreneurs are not depleting entitlement programs, as they are often portrayed as doing: They contribute more than $120 billion in federal taxes annually to support federal programs and thereby reduce dependency on entitlement programs. (And this does not include the billions of dollars they contribute to state and local taxes.)
- According to Babson College’s study The State of Small Business In America, more than half of all US small-business owners were aged 50 and older in 2016—up from 46% in 2007.
- Five years after opening shop, 70% of ventures established by senior entrepreneurs are still in operation, compared to 28% of enterprises established by younger entrepreneurs.
- While the majority of senior entrepreneurs create small and micro-businesses, they have an enormous cumulative effect on job creation. As Gina Harman, the CEO of Accion USA, said at the Clinton Global Initiative meeting in Chicago, “Of the 28.8 million businesses in the US, 91% have fewer than five employees. These businesses have been the largest net contributor of new jobs to the US economy in the past 15 years, and collectively employ 50% of all private sector employees.”
But of course it’s not only Americans who are growing older. In the UK, Ireland, and Australia, 50+ year olds are launching more startups than any other cohort. The EU has determined senior enterprise is key to achieving its 2020 economic strategic growth goals. And in Japan, which has the largest and fastest growing aging population in the world, prime minister Shinzo Abe has created a new initiative, “Agenomics,” to harness their knowledge and resources. As part of this effort, the government has supported the development of university innovation centers, (public/private) business incubators, and co-working spaces for startups and finance agencies designed to support older entrepreneurs.
Reasons for postponing retirement
It’s important to consider what has brought many seniors into the entrepreneurial startup arena. While some see entrepreneurship as an opportunity to do something they’ve always yearned to do, others may have wished to continue in traditional employment but lost their jobs.
Economically, baby boomers are the most likely among all age groups to say they lost money on investments since the Great Recession began, and that their household finances have worsened. And according to a PEW research report, among those baby boomers aged 50 to 61 who are approaching the end of their working years, six in ten say they may have to postpone retirement: The combination of the Great Recession and added life expectancy have created a shocking situation where many aren’t financially prepared to retire.
The vast majority of Americans—78%—say they’re “extremely” or “somewhat” concerned about not having enough money for retirement, according to Northwestern Mutual’s 2018 Planning & Progress Study. Their concerns are well founded, for 21% of Americans have nothing at all saved for the future, and another 10% have less than $5,000 tucked away.
Though massive numbers of seniors are starting businesses at record rates for a variety of reasons, there are many more who would like to but are totally intimidated by the word “entrepreneur.” At the Global Institute for Experienced Entrepreneurship, we have a program called the Experience Incubator, which is designed to boost confidence by helping people understand how they have been thinking and acting entrepreneurially all their lives: in their work, managing a home, raising a family, and so much more. We help people decode their entrepreneurial experiences decade by decade and learn how to translate those skills to optimize a business startup. If you were a single mother of four in the 1970s, for example, you had to be an entrepreneurial mastermind to successfully transport your children to multiple sporting events simultaneously, find moments to cheer—and remember to pick each of them up on time!
Testifying before the first US Senate hearing on senior entrepreneurship (which I designed for senator Mary Landrieu), I said, “We, as a society, need to stop all our negative age bias. The age wave is not a ‘silver tsunami’—it is a silver lining, yielding golden dividends.”
The senior entrepreneurs of the future will redefine work and life across all generations, cultures, and geographic boundaries. These generations will create a whole new paradigm for aging and retirement—as well as a growth sector for our economies.
Today’s seniors are assets and not liabilities. And their experience enhances prosperity for people of all ages worldwide.