Older and Self-Employed – a Satisfied Group

The transition to retirement can take many paths.

A couple years ago, Joelle Abramowitz at the University of Michigan described three groups of self-employed workers over 50. The bulk of them work independently, either as independent contractors or doing odd jobs, and are more often minorities, with very low pay and few employee benefits. Think Uber driver. The other two groups are business managers and business owners, who are predominantly white, male and in good financial shape.

In a follow-up to her earlier research, Abramowitz dug into 24 years of data to understand the self-employed older workers’ attitudes toward work and the transition to retirement. She found a heterogeneous group with a range of views about whether they are transitioning at all.

The independent contractors and workers stand out for being more likely to describe themselves as “partially retired.” Although they are self-employed, they apparently have their eyes on retiring. In addition to gig workers, they might be a caregiver, a stylist in someone else’s salon, or someone who drives people to the airport for a chauffeur company.

These workers have started their current jobs more recently than the owners and managers and say the work itself is not particularly stressful, which could indicate one of two things – that the job is less challenging than their past work or that its main purpose is just to generate extra income to bridge the financial gap to full retirement.

The owners and managers are much less likely to consider themselves in any stage of being retired, even though their roles may be changing. Their level of engagement reflects that. They usually work 30 to 40 hours and feel more stressed than the independent self-employed workers or older employees who are still on a company payroll.

Examples might be a manager supervising a high-level project for a former employer or a business owner who is handing off some responsibilities to a family member but is still heavily involved.

Self-employed older workers of all stripes do seem to have one thing in common: they are more satisfied with their lives than their counterparts who are still regular employees. The self-employed generally report being less depressed and in better health.

From this perspective, being self-employed could be a good situation in the waning years of a decades-long career. But whether or how much it helps with their financial well-being is a different matter altogether.

To read this study, authored by Joelle Abramowitz, see “Heterogeneity in Self-employment and the Transition to Retirement among Older Adults.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.