March 2004--More and more older workers are starting their own businesses. According to a study released by the AARP Pubic Policy Institute, about 16% of people over 50 are in business for themselves, compared with only 10% of all workers. And, according to the Self-Employment and the 50+ Population study, about one in three of those workers made the transition to self-employment after age 50. With the large group of aging Baby Boomers, this number is likely to increase in the future.

In 2002, slightly over 16% of people 50 and older were self-employed as part of unincorporated or incorporated business. The rate of self-employment for the workforce as a whole the same year was roughly 10%, and 40% of those self-employed were age 50 and above.

Some of these people have been self-employed for their entire careers, while others transition to working for themselves as a form of semi-retirement. People in wholesale and retail, repair services, and business and professional services were among those most likely to make the transition to self-employment after age 50. Also, people who were laid off or let go from their previous job after 50 were more likely to go into business for themselves than people under age 50.

Men are slightly more likely to become self-employed after 50 than women, and unmarried women were more likely to become self-employed after 50 than married women. And not suprisingly, people without pension plans were more likely to start their own businesses after age 50 than those with pension plans.

There can be problems with self-employment for older workers, a main one being health insurance. Many people who are self-employed either have no insurance or pay a great deal more than wage-and-salary workers for their health care. The study also showed that only 34% of people in business for themselves have health insurance. And for this small portion that does, health insurance bills can run hundreds of dollars each month. Thus, the study also found that older workers that had health insurance at a wage-and-salary job were less likely to quit and go into business for themselves.

However, the AARP study did find that self-employed people over 50 had a higher median annual income--almost $6,000 higher--than those at wage and salary jobs.

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