More people at or nearing retirement pursuing 'second act'
FARGO — Jim Clapper says one of the main benefits of a career with the U.S. Department of Agriculture was the opportunity to retire at age 55 with a government pension.
Early retirement allowed him the freedom to pursue other interests during a time of life many people refer to as their “second act.”
At age 62, Clapper turned his woodworking hobby into a business when he opened DIY Wood Studio in Fargo.
An increasing number of people at or nearing retirement age are doing the same.
The Ewing Marion Kauffman Foundation reports that almost one-quarter of new businesses in 2013 were launched by seniors ages 55 to 64.
That is up from 14 percent in 1996, according to the Kauffman Index of Entrepreneurial Activity, a leading indicator of new business creation in the United States.
There are a number of reasons behind the trend.
Thanks to healthier lifestyles and improvements in medicine, the average life expectancy continues to grow. Seniors are choosing to work longer to avoid outliving their retirement savings.
Being self-employed allows them to do work they are passionate about on their own terms and schedule. Many see it as an exciting way to start over with new plans, new goals and new careers.
A darker reason is that many cannot afford to retire. The recession forced many companies to lay off older workers with large salaries. In some cases, it also prevented those experienced workers from being hired elsewhere. The answer for many became self-employment.
Some retirees, like Paul Nielsen of Moorhead, Minn., continue working for pleasure more so than money.
Nielsen hand builds wooden toys that he and his wife, Marilyn, sell at area craft shows and online. He said he generally makes just enough money to support the hobby.
“Last year, if we’re lucky, we might have made 40 cents an hour,” Nielsen said. “We’re not depending on this to cover our retirement.”
He does it to exercise his mind and body, and he recommends the life to other retirees.
“I say ‘go for it’ if you enjoy making something,” Nielsen said. “It doesn’t have to be toys. If you enjoy making something, it’s fun to go to the shows. You meet a lot of people and get to talk about your craft.”
Help is available
In 2012, AARP and the Small Business Administration joined forces to provide “encore entrepreneurs” with access to online courses, live workshops and mentor programs designed to help prepare them for starting and running a small business.
A number of workshops were held across North Dakota in April in recognition of National Encore Entrepreneur Mentor Month. Clapper served on a panel with other encore entrepreneurs at a session held this week in Fargo.
The goal was to provide attendees an accurate picture of the risk and rewards of owning a small business.
“The nerve-wracking part is that I’m doing this because I like woodworking,” Clapper said. “I don’t like business at all.”
He admitted he did not expect it to take so long to turn a profit.
“I thought it would take off a little faster than it has, but I’ve heard people say you have to be in business for five years before you see a profit, and I’m only halfway there right now,” Clapper said.
That does not mean the business has been without its rewards.
Like Nielsen, Clapper appreciates the mental and physical challenge of the work. He also is grateful for the friendships he has made through DIY Wood Studio.
“My wife reassures me that there is a reason for this. We don’t have to look at the financial benefits. It’s that we’re helping individuals,” Clapper said.