Everyone knows that age discrimination in the workplace is against the law. However, we also know there are subtle and insidious methods employers use to get around this to prune their staff of older and often higher-paid older workers.
One of the best ways to protect yourself from this eventuality is to be self-employed, which means starting your own business. You may want to do this while you still have a job, so you're ahead of the game. In fact, if you move fast and start a new business within the next two weeks, you could be eligible for a $10,000 deduction from your 2010 taxes.
The idea of starting your own business may seem beyond your reach. It's not. (See Boomers Becoming Their Own Bosses). We all have our unique talent or expertise that can be leveraged into any kind of business imaginable.
My friend Charlie Reina is a carpentry buff and loves to build furniture. When he was downsized, he started up a small business making and selling furniture to family and friends. It not only gave him income but it allowed him to get paid for something he loves to do.
So first in the top ten reasons to start a business for your retirement years is that you may finally get to have your dream job. Instead of having to take jobs throughout your career just to pay the bills, now you actually may be forced to do something you love or at least are good at.
The second reason is financial security. All the studies show most of us are going to need more money to fund the final 30 or so years of our life because we simply haven't saved enough. Running your own business could easily provide the financial cushion you need to survive.
Third, which we alluded to earlier, is that with your own business there is no age discrimination. You won't get fired because you're over-paid or over-qualified, or because you're 30 years older than everyone else in the company.
Fourth, You can start anytime. This is from David Ning who runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He says you can start your business now, next year, or in a few years. Of course, the earlier you start, the more time you have to grow your business. But there are no time constraints or limits.
Fifth, You set your own hours. This is from my wife Jan who has her own publishing company. She'll be at her desk at 3 a.m. talking to a publisher in India. A lot of her book sales involve foreign rights. But the point is once you begin your own business, you can work in the daytime, at night, during the week or on weekdays. It's up to you to determine when and how long to work each day.
Sixth. It keeps your mind sharp. This comes from David Ning as well. He says playing golf every day may be fun for some, but it doesn't exactly keep you mentally healthy. Running your own business will.
Seven. It allows you to delay your Social Security payments, which get higher the longer you can postpone claiming your benefits. If you can wait until you're 70 instead of taking Social Security at 62, you could get a monthly check that's nearly twice what you would have received if you began at 62.
Eight. It also allows you continue growing your Social Security earnings record. David Ning offered this suggestion too. He says your Social Security payout is based on your 35 highest years of earnings. So if you were only employed for 34 years, $0 will be factored in for the 35th year, which drastically lowers your average. However, a side business in retirement can help with that. The income from your business could potentially boost your Social Security checks.
Nine. This one I like because I've done it. You can deduct your health insurance premiums from your taxes. I had to pay nearly $18,000 for medical coverage for my family one year, but was able to deduct it from my taxes because I was self-employed that year.
Ten. If you start your own business before the end of this year, you may be able to deduct up to $10,000 in start-up costs on this year's taxes as part of the recently enacted Small Business Jobs Act of 2010. The act was passed to help stimulate the economy and has some other benefits in it as well.
To be eligible for the write-off, you simply have to be "in business." That means you have to sell at least some product or service but you don't have to make a profit, just have at least one sale on your books that shows at least $1 of revenue before Dec. 31, and then you may be able to take advantage of the tax break. As with anything involving taxes, talk to your tax advisor to see what you need to do to get this deduction.
What? Now?
Now you may be thinking that how can now be a good time to start a business? It's almost the end of the year. People are focused on the holidays. The economy is still struggling to recover. Unemployment is still high so consumers aren't spending. What's the deal?
William C. Dunkelberg, chief economist for the National Federation of Independent Business (NFIB), says no matter how bad you may think it is, there's a glint of optimism in the air. And he points to the most recent monthly survey NFIB conducts by polling over 800 small business owners.
The survey found that in November, small business owners reported net new job creation. It wasn't much. Seasonally adjusted, 14% of owners reported increasing employment at their firms by an average of 3.4 workers. But that was the highest reading since December 2007.
On the other hand, 16% reported reducing employment an average of 3.2 workers. But when you compare the figures you can see that job creation was slightly positive in November.
Dunkelberg adds that consumer and owner optimism is rising slowing, so owners will be more willing to bet their money on the future, making more capital expenditures and hiring more workers. It's also a little easier to borrow. Banks loosened lending standards for small businesses in the third quarter, according to a Federal Reserve's senior loan officer survey released last month.
Running a business is hard work. But it's also extremely rewarding, and as the old saying goes, if you love what you do, you won't call it work, which could be the best reason of all to start your own business.
