Self-Employment as a Step in the Retirement Process—Issue Brief
by Michael D. Giandrea, Kevin E. Cahill & Joseph F. Quinn
September 2008—Older Americans are staying in the labor force longer, and are often changing jobs late in life. This issue brief focuses on a specific type of transition: self-employment as a step in the retirement process.
In general, older workers regard self-employment as advantageous because it offers independence and flexibility. Trends show that more wage and salary workers switch to self-employment later in life; and once self-employed, workers transition out of the workforce slower than those who remain wage and salary workers. Research also indicates that individuals moving into self-employment generally tend to be in excellent health, have pursued higher education, and have had high earning jobs.
Understanding the move to self-employment is important to employers as the Baby Boomer generation approaches retirement age and labor shortages loom. If employers act to meet the needs of their aging employees, it is possible that they will be able to retain these valuable workers and avoid shortages. However, by not acting to retain these older workers, employers potentially risk losing a highly knowledgeable and motivated demographic.