Baby Boomers, Not Techie Millennials, Most Likely to Start Businesses
Our perception of life after 65 has changed drastically in the last 30 years, with only 14 percent of baby boomers viewing retirement as a time to “retire and enjoy a well-deserved rest, take it easy, pursue leisure activities and take care of myself,” according to a study by Encore.org.
As a result, the Bureau of Labor Statistics finds the percentage of Americans working past 65 has jumped from 10.8 percent in 1985 to 18.5 percent in 2012. Gone are the days of retiring off into the sunset for a slow-paced lifestyle marked by countless tee times.
In fact, baby boomers aren’t just working longer, they’re starting new businesses and driving strong growth in our economy. This has all contributed to an interesting shift in American entrepreneurship. Although technology and digital startups get the majority of news headlines, baby boomers are actually twice as likely as millennials to start their own businesses, according to a 2015 study by the Kauffman Foundation.
So, what is fueling this growing trend?
Improvements in health and quality of life in later years are certainly important factors. In the 20th century alone, average lifespans in developed countries have increased from approximately 50 years to more than 75 years. We aren’t just living longer, we are living better. Not only are baby boomers the wealthiest living generation, they’re also well-positioned to have the resources and, just as importantly, the deep experiences that are invaluable when starting a fledgling business.
The 2008 financial crisis and subsequent recession have also played a role. Based on a Pew Charitable Trusts study, the baby boomer generation lost between 25 and 28 percent of their median net worth during the recession. In 2008 alone, retirement accounts lost $1.6 trillion (18.3 percent of their value), according to Urban Institute. When coupled with living longer than ever before, it’s natural that many people are opting to start a second career as a way to build a better foundation for their eventual retirement.
However, for many baby boomers, the simple love of entrepreneurship and the chance to pursue their passions are driving them to build new companies. Rather than enjoying a quiet lifestyle, they want to still be in the game and simply don’t want to be limited by an age milestone to tell them when to call it quits. In fact, studies such as one published by the Journal of Economic Perspectives have found that early retirement can have a detrimental impact on cognitive abilities and even physical health. Working helps baby boomers stay sharp and remain connected to the outside world.
While it’s great to see baby boomers continuing to thrive past the point historically associated with retirement, our youngest generations – those often with the biggest and boldest ideas – sometimes struggle to gain the strong foothold needed to embrace entrepreneurship. Millennials, who represent the largest group of people in their 20s and 30s in American history, are frequently burdened with student loan debt. The average college graduate today will have to pay back just over $35,000, making the class of 2015 the most indebted class to date.
Despite these challenges, millennials still value entrepreneurship. According to a survey by Bentley University, 67 percent of them say that their career goals involve starting their own businesses. However, many are putting off major life decisions because of student loan debt. Clearly, the desire is there. As a society, we must foster more opportunities for mentorship, where baby boomers and millennials can network together to establish mutually beneficial relationships – one side bringing decades of earned wisdom and the other bringing youthful energy, technology savvy and a unique focus on innovation.
Helping millennials prepare, budget and make decisions regarding their businesses falls on all of our shoulders – parents, professors, corporate leaders, and yes, even bankers. At a time when the Wall Street Journal reports that the top 10 largest banks have cut small business lending by 38 percent since 2006, I’m proud to work for Republic Bank, a local banking institution that has stepped in to fill that gap, ranking as the no. 1 originator of SBA loans in the tri-state area for three years in a row.
As a baby boomer myself, I’m excited to see my peers embracing entrepreneurship. It will only help make our economy stronger and communities more vibrant. Now, if we can collectively embrace the idea of working collaboratively with younger generations to learn from them and pass along our hard-earned knowledge, we will be investing in a bright future that will pay great dividends for years to come.
That, very well, could be the greatest gift the baby boomers generation has to give.
Rhonda Costello is executive vice president and chief retail officer of Republic Bank.
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