Supporting research AXA Wealth conducted earlier in the year, a survey by O2 Business has found that a quarter of over 55s are looking to become later-life entrepreneurs.
Highlights from AXA Wealth’s later-life entrepreneurs study
• over half a million over 55s are considering taking advantage of new pension freedoms to start a new business
• almost half intend to use 25 per cent tax-free lump sum to fund their start-up
• a third (35 per cent) driven by dream of owning own business
The top three reasons stated for starting a new business with released pension funds were:
1) realising a lifelong dream to be a business owner was cited as the top motivation by over a third (35 per cent)
2) monetising a hobby was revealed as the investment incentive for a quarter (25 per cent)
3) nearly one in five (19 per cent) are driven by the urge to utilise the experience and skills gained throughout their professional career in order to supplement their pension income.
Margaret Mountford, known for her role in the BBC’s The Apprentice said:
“This trend has come about as a result of a combination of things: longevity, health, and the fact people can get hold of some of their pension money. You may think the word pensioner suggests that image of the old people crossing the road, but it’s not like that now. People are looking for a lifestyle change – doing something different but staying active. Although, I think it’s easy to get carried away by an idea and see it through rose-tinted glasses. Starting a business may look easy, but it isn’t.”
Adrian Lowcock, head of investing at AXA Wealth, comments;
“We’re seeing a revolution when it comes to retirement spending. The widespread concern that pensioners will blow their whole pension on a supercar feels exaggerated. Instead we are seeing a diverse approach; with the over 55s taking to the freedom and opportunities created by the pension reforms – in this case fuelling a whole new generation of later-life entrepreneurs.”
“But with more choice and freedom inevitably comes more risk, and although small businesses are the backbone of Britain, most fail to make a profit and end up losing all their investors’ money. For the majority of people it is not an appropriate use of their pension pot. You wouldn’t want to risk your hard-earned pension money, so anyone considering investing in a small business needs to consider what the loss of their investment and retirement income, would have on the quality of their retirement.”