Nearly four in 10 Canadians envision becoming entrepreneurs during their retirement years, according to a new report from Toronto-based BMO Financial Group.
The report reveals that 39 percent of Canadians say that it is likely they will start their own business after they reach retirement age (65 years old). More generally, 81 percent plan on working in some capacity during their retirement.
The top reasons identified by Canadians for starting their own business in retirement, the study finds, include:
• The need for additional income (75 percent of respondents)
• A desire to stay sharp/mentally focused (62 percent)
• It would be an enjoyable hobby (53 percent)
"It's clear that many Canadians are looking to generate additional income during their retirement years," said Marlena Pospiech, Senior Manager, BMO Wealth Planning Group, BMO Financial Group. "People are living longer than ever before. So, for an increasing number of Canadians, retirement savings may need to last more than 25 years.
“Additionally, with the decline in employer-sponsored defined registered pension plans and reforms to government pension plans, there's now a greater need for people to supplement their income during retirement to compensate for that income gap,” she adds. “This is particularly true for those who haven't been saving aggressively for retirement through retirement savings vehicles such as RRSPs and TFSAs."
Among the study’s other key findings:
• Men are more likely than women to start their own business in retirement (46 percent vs. 33 percent);
• Those in Alberta are the most likely in Canada to start their own business in retirement (53 percent); Quebecers are the least likely (25 percent).
The study also finds that, when asked about how they plan to fund their business, 47 percent said that they would use a portion of their retirement savings. Other funding sources pre-retirees said they would consider include:
• A separate savings account earmarked for a business (43 percent);
• A loan from a bank or another source (34 percent);
• Their inheritance (21 percent);
• Family/friends (14 percent).