7 Tips for Retirement Entrepreneurs

The baby boomers are hitting retirement age. Traditionally people have spent their golden years playing golf, sitting poolside and collecting Social Security for 20 years or so.

However, many of today's new retirees say they intend to keep working, and some plan to start their own businesses.

Stacy Francis, president and founder at Francis Financial in New York, says there are several good reasons to become your own boss once you've given up the 9-to-5 routine.

"No. 1 is because we're healthier, but also because people want to stay engaged," Francis says. "A third reason we often see is for extra income, to help supplement those everyday living costs that maybe they didn't save for."

Starting a business at any age requires some serious thought and planning. In addition, there are a few special considerations for people thinking of opening a business during their 50s, 60s or beyond.

Following is a checklist of things to think about before jumping into entrepreneurship during your golden years.

7 tips for retirement entrepreneurs

1. Follow your passion
2. Consider your margin for error
3. Don't crack your nest egg
4. Evaluate health and lifestyle
5. Think 'inside' the box
6. Get help before you need it
7. Ask yourself this question

1. Follow your passion
Choosing a business that allows you to pursue your passions may be the most important step in creating a successful business in retirement.

"I think it's really up to each person and what they want to do," says Ken Proskie, who left the corporate world at age 51 to become CEO of his own business, Compass Health & Safety in Evanston, Ill. "It may not have anything to do whatsoever with your previous background or jobs or previous training."

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Gary Dunn agrees. Dunn left the corporate world at 38 years old to publish The Caretaker Gazette, a newsletter he publishes out of Boerne, Texas, that tries to match house sitters with homeowners who need an on-site caretaker.

Dunn suggests building a business around something you enjoy, whether it's woodworking, writing or painting.

"You've got to have a passion for whatever the business is," Dunn says. "If you've got something you love to do and have a passion for it -- and you have that nest egg under you as a cushion -- you should be successful. Just do whatever you love doing and concentrate on it."

2. Consider your margin for error
Most business owners mess up somewhere along the line, sometimes catastrophically. If you're in your 20s, 30s or 40s, there's plenty of time to get back on your feet and start over.

However, the margin for error is a little smaller once you reach retirement age, according to Steve Strauss, small business columnist for USA Today and author of "The Small Business Bible."

"All great entrepreneurs try to reduce risk, because entrepreneurs are inherently at risk," Strauss says. "But when you retire you're really susceptible to risk because you can't make it up. When you're 30 and you make a mistake, there's still room and time to catch up. When you're 70 or 65 and you blow a lot of money, you really can't afford to make that mistake."

3. Don't crack your nest egg
One way to minimize the risks surrounding a post-retirement business is to avoid dipping into your retirement savings to start the business.

"I don't think they need to spend their retirement money," says Jeff Williams, chief coach for Bizstarters, an Arlington Heights, Ill., firm specializing in older entrepreneurs. "I don't think it's a good idea, and I don't think they need to do that."

A little careful research and planning can eliminate the need to tap into your nest egg, Williams says.

"You're looking at being able to start a business for well under $10,000," he says. "With a smart marketing plan you're making money in a month or two, so what do you need to spend your retirement money for? It's the last place you should go for money. It would be better to take out a home equity loan than tap your 401(k)."

When protecting your nest egg, don't forget about Social Security benefits. If you make too much money, the government taxes your Social Security benefits. Currently, a married couple filing jointly can earn $32,000 annually before Social Security benefits are taxed; for a single person, head of household or qualified widow or widower, the cap is $25,000.

This income can come from a pension or from a business or both. Francis feels that this is "really something you need to take into account" when planning to open a retirement business.

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