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Switching to Self-Employed When Heading for Retirement.

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Few older employees transition to self-employment post-50. Health, marital status, and national unemployment influence this career shift, offering an alternative to retirement. This extends working lives and provides income sources.

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Area of Science:

  • Gerontology
  • Labor Economics
  • Sociology of Work

Background:

  • Aging populations necessitate extended working lives beyond traditional retirement ages.
  • Self-employment is increasingly recognized as a viable option for older workers seeking flexibility and continued engagement.
  • Understanding the transition to self-employment after age 50 is crucial for policy development and individual career planning.

Purpose of the Study:

  • To examine the prevalence and determinants of transitions to self-employment among individuals aged 50 and above, prior to official retirement age.
  • To identify individual and country-level factors influencing the decision to switch from salaried employment to self-employment in later working life.
  • To assess the role of self-employment as a strategy for income generation and continued activity post-retirement.

Main Methods:

  • Utilized data from the Survey of Health, Ageing and Retirement in Europe (SHARE), encompassing 16,412 individuals across 18 countries.
  • Employed multilevel analyses, pooling individual-level data nested within country-level variables for comprehensive examination.
  • Analyzed factors including health limitations, marital status, and national unemployment rates impacting the transition to self-employment.

Main Results:

  • A small proportion of employees opt for self-employment between age 50 and retirement.
  • Health status, marital status, and national unemployment rates significantly influence the decision to become self-employed.
  • The transition is influenced by factors such as wage differentials and limited post-retirement employment opportunities for salaried workers.

Conclusions:

  • Self-employment serves as a practical pathway for individuals aged 50+ to extend their careers and maintain financial independence.
  • Policy interventions could support older workers considering self-employment by addressing barriers related to health and economic conditions.
  • Encouraging self-employment can contribute to active aging and provide valuable income streams, mitigating challenges associated with traditional retirement.