How to Start a Business in Retirement

Want to start a business in retirement?

For some people, retirement life conjures up images of five-hour afternoon naps, leisurely strolls at the park and cruise trips to the Bahamas. But what if you’ve got more to give and don’t want to kick your feet up just yet? Starting a biz might just be the perfect next move.

But we get it. Launching a business from scratch in retirement can be intimidating if you don’t have a strategic plan. So, to help you get started, we’ve broken the process of starting a biz into manageable steps you can follow. We’ve also gathered some valuable tips from retirees who’ve already taken the plunge and built successful businesses of their own.

How to Start a Business in Retirement

Retirement is the perfect time to dive into that business idea you’ve been tossing around for years. Here’s what you need to do to get your biz off the ground.

1. Determine What Business to Get Into

So you’ve decided to pursue your dream of becoming an entrepreneur in retirement. Congratulations! But now comes the important part: What kind of business should you start?

• Take stock of your strengths, interests and passions. Do you enjoy spending your weekends baking Oreo cheesecakes for your grandkids? Perhaps a small bakery or catering business is in your future. Are you a retired accounting professor and a whiz with numbers? Maybe a tax preparation or financial consulting business is your calling.
• Research market demand. Remember, for a business to be successful, there needs to be market demand. After all, no matter how spectacular a service or product is, it’ll get you nowhere if there’s zero need for it. So, before diving headfirst into a business venture, do your research and find out what people need or want. We’ll go into detail about how to perform market research later in the article.
• Consider your budget. If you’re working with limited funds, opening a luxurious five-star hotel in Beverly Hills may not be the most feasible idea since you’ll need big bucks to make this dream a reality. But if you simply want to start a business to hone your entrepreneurial skills and make extra income during your golden years, there are plenty of businesses you can start with less than $1,000.

More from The Penny Hoarder: Our roundup of the best side hustles out there.

2. Perform Market Research and Competitive Analysis

Market research means gathering information about your potential customers, such as their age, gender, purchasing habits, needs, where they live, etc. This information helps you niche down so that you can tailor your product or service to meet their specific needs. To conduct market research, you can use a variety of tools, such as online surveys and customer feedback. The U.S. Small Business Administration’s list of market research resources is also a great place to get started.

When performing market research, you’d want to find the answer to these questions to determine whether your business is a viable idea.

• Demand. Is there a need for my product or service?
• Market size. How many people would be interested in my product or service?
• Location. Where do my ideal customers work and live?
• Market saturation. Are there many similar products and services on the market?
• Pricing. How much are potential customers paying for similar options?
• Economic indicators. What is the income range and employment rate of my ideal customers?

Once you have a solid understanding of your target market, it’s time to perform competitive analysis — which means researching your competitors and analyzing their strengths and weaknesses. To do this, identify your top competitors and gather information about their products or services, pricing, marketing strategies and customer base.

For example, if you want to start a marketing consulting biz, head to LinkedIn and type “freelance marketing consultants” in the search bar to see who’s already out there killing it. Then, start digging into their online presence.

Check out their website and social media accounts, see how much they’re charging, who their past and current clients are and identify gaps in the market that your business can fill and how you could do things better. All this information will help you position your services in a way that stands out from the crowd.

3. Make a Business Plan

According to Harvard Business Review, “entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical non-planning entrepreneurs.”

Sure, that might not sound like a lot, but every little bit counts if you want to make it in the business world — you can’t just wing it and leave your success up to chance.

Let’s say you want to launch a freelance writing business specializing in engaging travel-related content. Here’s what you’d include in your business plan to build a solid foundation for your biz.

• Company summary and purpose. In this section, you’ll touch on your mission, values and goals. For example, what sets your business apart from others in the industry? What do you hope to achieve long term? What inspired you to start this venture?
• Description of your service. This section should clearly highlight what you bring to the table. For example, you’ll describe your approach to content creation, your expertise in relevant topics and any specialized skills or services you offer — such as SEO optimization.
• Organizational structure. Will your freelance writing business be a one-person show? Or do you plan on subcontracting some of your work to other writers?
• Client acquisition and management. Without a stable client base, it’s virtually impossible for your freelance business to thrive. So, this section will force you to put on your thinking hat and figure out how you’ll create a steady stream of clients. Will it be through cold-emailing? Promoting yourself on LinkedIn? Applying to jobs on Upwork? Or all three?
• Financial plan and expenses. This section focuses on the financial side of your business, including your projected monthly revenue, expenses and profit margins. We’ll dive into the nitty-gritty of how to estimate your startup costs in the following step.

Need a budget? Here’s The Penny Hoarder’s step-by-step guide on making a budget.

4. Estimate the Startup Costs

Your startup costs can vary depending on your business type since brick-and-mortar businesses, online ventures and service providers each have their own unique set of costs.

For example, opening a bakery means you’ll have to lease or buy a space, invest in bakery equipment and cookware, purchase inventory, train staff, etc. On the flip side, online business owners may need to spend more on website design and hosting fees. And if you’re starting a service-based biz, such as a freelance graphic design business, you may need to invest in certifications and courses to constantly upskill yourself.

Regardless of your business type, it’s worth looking through the following list of common startup expenses to get a better idea of how much capital you may need:

• Web hosting and other website costs
• Rental space
• Business registration fees
• Utilities
• Office furniture and design
• Labor expenses
• Machinery or equipment
• Inventory
• Insurance, license, or permit fees
• Advertising and marketing
• Website design and hosting
• Shipping
• Basic supplies
• Technology and software

5. Understand Tax Implications

Michael Santoro, business coach and Founder of Brand Velocity, said that understanding tax implications is key.

“Though there’s no restriction on how much you can earn in extra income when you’re at full retirement age, you must be aware of the tax implications if you’re generating business income in addition to your Social Security income,” he said.

According to the IRS, the portion of your Social Security benefits that’s taxable depends on your income and filing status. To determine how much you may owe Uncle Sam, take half of the Social Security money you collected during the year and add it to your other income.

If that total is between $25,000 and $34,000 and you’re filing as a single person, 50% of your benefits may be taxable. And if that total exceeds $34,000, up to 85% of your Social Security benefits are subject to taxation. However, the calculation can sometimes be much more complex. So talk to a financial advisor or tax professional who can help you understand how your retirement income may be taxed if you start a biz.

Related: Thinking ahead on taxes? Here are 2025 tax deductions explained.

Tips From Retirees Who’ve Launched Successful Businesses

Don’t let fear stop you from pursuing your entrepreneurial dreams in retirement. Here are some invaluable tips from those who’ve done it before to motivate you to just go for it.

Don’t Put Too Much Pressure on Yourself

Ellen Cibula  retired at 53 and founded Ellen H Cibula, Inc. to help businesses with their technology and payment needs.

“One thing I realized when starting my business was that I’m slower than I was when I was younger,” she said. “Everything took longer than expected, which was frustrating.”

However, she emphasizes that it’s okay to go at your own pace.

Instead of putting too much pressure on yourself, she recommends “setting realistic goals based on your current abilities.” This way, you can enjoy your retirement years while still making progress on your business.

Have Your 5 Ps

After a fulfilling career teaching science at community colleges, Jan Cullinane left her 9 to 5 life behind and decided to write books about retirement so she could help people with their journey after leaving a primary career.

“Before starting your business, be sure you have what I call the 5 Ps: Passion, people, platform, persistence and patience,” she said.

In Jan’s own words, here’s how the 5 Ps looked like for her when she started her entrepreneurship journey in retirement:

• Passion. “I have interest and competency in the area of retirement.”
• People. “I knew that there were thousands of people retiring every day, so a potentially huge group of buyers for the book.”
• Platform. “I started doing talks (for free at first) about retirement for groups at libraries, civic organizations, etc. and would ask people to write a short recommendation for me so I could gradually grow my endorsements.”
• Persistence. “Since I was an unknown author, it took a while before I found someone to represent me. True story – when I finally landed an agent, she asked me how I wrote such a great book proposal with being new to writing books and I had to confess it was by reading The Complete Idiot’s Guide to Getting Published.”
• Patience. “It took about a year to find an agent, write a book proposal and sign a contract with a publisher, but it’s worth it – and here I am five books later.

Be Open to New Ideas

Shri Ganeshram, seed investor, early retiree and founder of Awning.com, advises aspiring business owners not to be afraid to explore new ideas and take calculated risks.

“Don’t let age or the lack of experience in a particular field hold you back,” he said.

And if you need help along your entrepreneurship journey, “consider partnering with younger professionals to balance your wisdom with their fresh perspectives and technical know-how,” Ganeshram advised.

Dos of Starting a Biz After Retiring

• Do use your skills and experience. As a retiree, you’ve most likely accumulated a lifetime of skills and experience to call on. So, don’t let it go to waste.
• Do network and reach out for help. Starting a business in retirement all by yourself can be overwhelming and stressful. Reach out to your network when you need someone to support and guide you on your entrepreneurship journey.
• Do take care of yourself. When you’re building a business from scratch, it’s easy to get lost in the excitement and power through long hours without taking a moment to switch off. To avoid burning out, schedule self-care days or breaks into your routine.

Don’ts of Starting a Biz After Retiring

• Don’t use all your savings. Starting a business requires financial investment and it’s important to have a clear understanding of your financial situation before diving in. Don’t leave yourself short on living expenses trying to keep your business afloat. If your business starts eating into your savings, it may be time to cut your losses and pivot.
• Don’t rush the process. Starting a business after retirement can be a great way to pursue a passion, but it’s important to take the time to do it right. Rushing into a business venture can often lead to mistakes and setbacks. So give yourself plenty of time to perform market research and create a solid business plan.
• Don’t ignore business license requirements. If your business is an LLC, corporation,  nonprofit corporation, or partnership, you may have to file for licenses and permits with your state and local agencies and get a federal tax ID. Talk to a lawyer or accountant to ensure you’ve satisfied all regulatory requirements before launching your biz.

Jamela Adam is a personal finance writer covering topics such as savings, investing, mortgages, student loans, and more. Her work has appeared in Forbes Advisor, Chime, U.S. News & World Report, RateGenius and GOBankingRates, among other publications.