The new entrepreneurs

Let’s face it. The fact that older people are among the most likely to vote in elections means that you’d be hard-pressed to find a policymaker who isn’t highly familiar with their needs and wishes. But that doesn’t mean this demographic are in a privileged position, somehow immune from any trials and tribulations that only seem to afflict younger generations today. 

At present, Congress is mostly focused on delivering the financial entitlements that senior citizens were promised. It is well-documented that funding gaps persist throughout Social Security and, equally worrying, many unfunded pension promises made to public employees have yet to be resolved. The current policies are simply untenable. 

{mosads}If the next Congress is to achieve any structural reform, policy needs to change the discourse on senior citizens in the workforce first and foremost. 

Reframing the role of seniors in the labor force requires a shift in the way we think about how to harness their experience and education. This is important to promote a realistic portrait of older workers’ skills, by correcting existing stereotypes. In particular, this means moving the dialogue away from health and social security, focusing instead on retirees as entrepreneurial members of the labor force. 

Keeping senior citizens in the labor force is an important way of stemming the potential decline in productivity and sustaining economic output. In particular, retaining would-be retirees through self-employment, or entrepreneurship, holds significant attraction for policymakers. 

Retirees are highly educated. OECD data suggests 23.8 percent of U.S. adults aged between 55 and 64 have completed higher education. People are also enjoying better life expectancies, suggesting that prevailing retirement ages are increasingly premature. With their health  and ambition still intact, why should older Americans step into retirement when they have so much still to offer? 

Harnessing retirees’ intellectual capital through entrepreneurship is a necessary addition to policy discussions. In fact, older people are starting businesses and scaling up this trend as a prerogative for policy. For example, according to the Kauffman Foundation, businesses started by those aged between 55 and 64 in the U.S. accounted for nearly one-quarter of all new activity in 2013. That share has risen from 14 percent in 1996. 

Like all new business owners, older entrepreneurs need access to capital to grow and scale businesses. However, greater financial security and reduced credit risk mean a potentially different risk profile for these borrowers. 

There are several ways policy could work to support funding for retiree entrepreneurs. First, tailored credit products, which consider the lower risk structure of this cohort, are an option. This could include loan guarantees, trade finance, interest rate subsidies or loan quotas for lenders. Policymakers could also establish targeted grants for senior entrepreneurs. Second, policymakers could make financing available as part of an integrated mentorship program. Finally, governments should recognize that financing needs will likely cover a wide spectrum for retiree entrepreneurs and support should be designed accordingly. While some retiree entrepreneurs will need start-up funding, others with higher incomes and wealth may instead require “scale-up” funds and larger loans with credit guarantees. 

But beyond funding, policymakers arguably have an even greater challenge of making the very idea of working beyond the traditional retirement age more accessible. 

To this end, flexible working arrangements for older workers should be prioritized by current employers to address the challenges posed by full-time employment. Further, policymakers could remove any financial disincentives for newfound self-employment in retirement. This could mean ensuring retirees are unconditionally eligible for Medicare and Social Security, and can access their employer-sponsored pension benefits — even as they continue to work in a self-employed capacity. And policies to encourage cross-collaboration between old and young entrepreneurs — including tailored hiring and tax subsidies — could help make this route more attractive to both parties. This approach would help support the necessary mix of skills and funding for both old and young.    

The demographic revolution currently rippling across borders is one that will only gather pace in the years ahead. That people are living longer is a great humanitarian achievement, but one that manifests a rapidly increasing population with retirement periods longer than their careers. To prosper in this environment and drive sustainable economic growth, policymakers must rethink what might be long-held judgments about retirees and their value to the country’s economy. A new mindset offers new opportunity. Ours is a world in need of an injection of sustainable growth — senior citizens are ready, and increasingly willing, to play a vital part.

George Atalla is Ernst & Young’s Global Government & Public Sector Leader and can be reached at The views reflected in this article are the author’s and do not necessarily reflect the views of the global EY organization or its member firms.



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