The wheels of the home remodeling sector, Mike Dodd recalls, were coming off in 2007. When you’re in your 50s and your business of 25 years is facing an existential threat, you start doing some soul-searching. That can lead you in new and surprising directions and, as in Dodd’s case, set you on a course for a whole new kind of business success.
“We were kind of at a crossroads of what we were going to do: Do we consider shutting our doors, or do we retool and face the challenge head-on?” Dodd recalls. “So we strategized and felt that with home remodeling specifically to meet the needs of seniors, we would be on the leading edge, if not way ahead of it.”
His wife, who had been in home care and hospice care for 35 years, offered some insights. By marrying that knowledge with his own background in construction, a new business model emerged. “We’ve been watching this market evolve and develop over the last decade, but we also recognized that timing is everything,” Dodd said. “As the market was changing and Baby Boomers got older, we felt strongly that they were going to demand that the market change and adapt to their needs.”
Taking their combined knowledge a step further, Dodd added occupational therapists to his company’s staff, bringing new insights for project work tailored specifically to seniors. “At the end of day, we are remodeling contractors, but we depend heavily on the recommendations and assessment skills of our OTs, who understand the needs of patients,” Dodd said.
Today, in the face of a grinding downturn in construction, Dodd’s business is thriving. His is not, however, an isolated case. All across American business, a transformation is beginning to take place, especially as the first of the Baby Boomers reach their retirement age of 65 this year. They’ll continue to march across that threshold, nearly 12,000 a day, between now and roughly 2032. That’s when the last of the Boomers, those born in 1964, hit their own retirement age.
THE CHANGES AHEAD
Experts in issues related to aging say this generation’s migration into senior citizenship will impact almost every aspect of commerce, in ways unprecedented in scope and scale. Here’s why: From 1920 to 1930, the decade of birth for many of the Baby Boomers’ parents, life expectancies topped out at 58.1 years for men and 61.6 for women. There was no great statistical expectation of reaching the age of 65, which in any case was still something of an abstraction, since there was not yet a Social Security program to make that number the life-time milestone it has become.
Fast-forward a generation. The boom started Jan. 1, 1946, and for males born in 1950, the life expectancy was 65.6—about the second week of this verymonth, for those at the tip of the spear. And that life expectancy figure increased dramatically through the end of the boom in 1964.
So a leading-edge Boomer alive today has already defied the odds. More significantly, according to Social Security’s actuarial tables, a 65-year-old man today has 17.2 years of life expectancy remaining; that’s just shy of 20 years for women.
This simply hasn’t happened before. It means a lot of people will be living a lot of extra years, with a lot of new demands—and with a lot of accrued and inherited wealth to act on them. The sheer numbers of more affluent people in that age group will produce a gravitational effect on investment markets that has yet to exert its full power.
“Baby Boomers seem to me more connected to their financial plans, more knowledgeable about the markets and more worried about their futures than ever before,” said Marty Bicknell, CEO of Mariner Wealth Advisors in Leawood. “It’s never been just about investment returns, and Baby Boomers want the ability to look beyond money to those things that their wealth allows them to pursue,” he said.
Instead, they are focused on achieving specific life goals, whether that’s traveling the world, spending time with family or supporting a grandchild’s education, and that focus means wealth managers can no longer provide investment advice alone. “Rather,” Bicknell said, “they will have to excel at comprehensive life planing advice, and Boomers will demand a team of wealth professionals to do that, not an individual.”
The trillions of dollars of wealth that Boomers have aggregated, and will continue to, will drive markets and behaviors for years, experts say. Given this age cohort’s reputation for pushing back age barriers with its active lifestyle, the numbers involved raise some intriguing questions: For those who continue to work, what would 10 years of additional income, or even five, do for their financial security when they do retire? What would that, in turn, do to investment markets? How might a higher level of activity and work-force engagement help maintain physical and mental conditioning? And how will the work forces be affected?
Perhaps most intriguing of all for business, what might happen as Boomers—perhaps millions of them, armed with enormous aggregate wealth, use their retirement years to scratch an entrepreneurial itch long repressed by demands of family or corporate career tracks?
UNIQUE POSITIONING
One key differentiator for a new generation of entrepreneur, says Teresa Moravek, is the ability to self-finance a small business in ways we’ve never seen before. “Baby Boomers have retirement funds, 401(k) plans that can be rolled into the new corporation as part of the startup funding or continued operating capital,” says Moravek. Her Lee’s Summit company, PerformancePointe, provides career counseling and development services to a wide range of clients, with older workers being just one segment.
“Not only do you have competencies, but you have the wisdom” within that age group, Moravek says. “There’s a lot to be said for the wisdom that goes along with 25 or 30 years of lessons learned. A 30-year-old can bring fresh perspective to a business, but a 55-to-60-year-old, or a 65-year-old, has already made the mistakes.”
Mary Beth Izard of Shawnee, author of a book called Boomerpreneurs: How Baby Boomers Can Start Their Own Business, Make Money and Enjoy Life, noted studies that have shown roughly 80 percent of Boomers plan to work, at least part-time, past traditional retirement age.
“For many of the people I work with, starting your own business is the ideal way to have the best of both worlds with work and retirement,” Izard said. “A lot of times, people who are 60 or 65 are looking for more flexibility, more freedom. Their goals have changed somewhat. Financially, they might not be able to not work, but working in their own business, they might generate some income, while still enjoying certain freedoms.”
A study by the Kauffman Foundation, she noted, found that the cohort most likely to start a business was framed by ages 55 to 64. “If you go back to the life-expectancy piece,” Izard said, “you can only assume that health-wise, this age group is going to live longer; there’s a good likelihood they’re in a little better condition at 64 than previous generations.”
The kinds of businesses they may start, she said, would likely be lifestyle businesses that track with personal interests and hobbies. But given the erosion in many Boomers’ retirement plan balances since the most recent recession, they likely would be low-risk ventures that wouldn’t threaten financial security in their remaining years.
The start-up appeal also extends to older unemployed workers regardless of age, Izard said. Many of them want to go back to work, but in a job market like this one, roughly 9 percent come to the realization that the best way to get a job is to create one through their own company.
Irrespective of the motivation for their entrepreneurship, she said, “I encourage people to look at what they know, and trends within what they know” when formulating a business-ownership strategy. “Looking at the marketplace and trends is a great way to identify opportunities, but do it within your own area of expertise.”
STILL AT WORK
Much has been made of the potential labor shortfall that could slap the nation’s employers as Baby Boomers transition out of the work force. A congressional analysis in 2008, though, suggested that those fears were overblown. Yes, those in Generation X make up a far smaller cohort than their predecessors, but trailing them is the Boomer Echo: The 73 million so-called Millennials who are already pouring into the job market.
That’s not to say companies won’t feel the impact. A company generally doesn’t just plug a Millennial into a slot formerly held by someone with 40 years of experience without some drop-off. The challenge for business, consultants say, is making sure that knowledge-transfer practices are up to snuff before the crest of the Boomer retirements crashes ashore.
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