There has been a significant increase in the number of people aged over 50 who have become self-employed. Whether taking redundancy or drawing their Defined Benefit or Final Salary pension early or simply wanting to move into a line of work that is less structured or more flexible.
Have you ever dreamed of working in a different career or making you passion your profession? This is exactly the sort of planning we love to get involved in with clients.
A typical inquiry we may receive from a prospective client is in helping them work out if they can afford to take the redundancy package on offer and still live the life they want to live. How much will they need to earn from self-employment to supplement their income from investments and pensions.
Research from IPSE (the leading association for contractors, consultants, interims, freelancers and self-employed people) suggests that there are nearly 1m self-employed people aged over 50. This number represents an increase of over 68% in the last ten years.
The key attractions of self-employment are considered to be control over the type of work being done, presumably focusing on what they are most skilled to do and also the kind of work that they most enjoy doing.
Another aspect of the control delivered through self-employment is when the work is done; self-employment isn’t typically a 9- 5 role the self-employed person is usually able to choose the hours they work to suit them.
For some it’s about the location as well; a freelance writer might as easily write an article from a tropical beach somewhere, as an office in a city centre. The keyword seems to be flexibility a much sought after commodity amongst the self –employed. But there are downsides as well.
In 2017, the Department of Work and Pensions identified that the average income for a self-employed person was only about 50% of that of an average employee. Of course, the opportunity to earn a lot more than the typical employee exists; self-employment is about aiming as high as your imagination allows. Many of the over 50s who have become self-employed have done so because of the loss of a job. Others will have done so as they can see the commercialisation of an existing hobby or interest.
The ability to market yourself and acquire new clients is an important skill set that needs to be developed or outsourced to maximise success. Employment often brings a raft of additional employee benefits such as pensions, life assurance and income replacement in the case of illness or disability. The self-employed person is though on their own, and they need to make these arrangements for themselves.
However in return the self-employed need to take on responsibilities for life insurance, sick pay and, pension that they may not have previously required or considered.
So, perhaps self-employment is a trade-off between control and flexibility and the security of a known pay packet each month.
