Planning to work beyond retirement age? You may have to call an audible

The coronavirus recession is hitting workers across the board, with some early evidence that the effect is disproportionate among older workers. For example, the unemployment rate in April for those 65 years and older increased 15.4% compared with nearly 13% for those ages 25 to 44, according to three Tulane University economists. Other researchers have unearthed evidence that the downturn has pushed older workers to apply for Social Security earlier than planned.

The concern is that the lingering effects of the downturn will upend a key retirement planning message in recent years: Plan on working well into the traditional retirement years. For one thing, most people haven't set aside enough in savings to live comfortably even with Social Security. Earning an income makes it practical to delay filing for Social Security, a smart financial move since benefits are more than 75% higher if filed at age 70 vs. age 62. For another, work is a community. Many near-retirees look for the kind of job that offers purpose as well as a paycheck in their next chapter.

"The surge in unemployment means that employment prospects for those aged 50+ look more troubling now, especially given ageism in recruiting as well as biases in firing," Andrew Scott, professor of economics at the London Business School, noted recently.

One practical response for near-retirees to consider is whether to join the ranks of entrepreneurs, including self-employment. Those 55 to 64 years old account for more than a quarter of new business startups in recent years. The Bureau of Labor Statistics says the self-employment rate among those 65 and older is the highest of any age group. These percentages are likely to swell as near-retirees evaluate their job prospects in the post-pandemic economy.

The attractions of entrepreneurship are many for older Americans. Starting a microbusiness or lifestyle business offers a measure of control in an unstable economy. The income won't be great, but most entrepreneurs enjoy what they are doing to earn a living.

Don't get me wrong. Starting a small business is hard work. The good news is an ecology of knowledge, advice and support exists throughout Minnesota and elsewhere. Tapping into this widening ecosystem increases the odds of success.

A microenterprise could be a critical part of your retirement financial safety net, especially considering how difficult the next few years look. Think it over.

Chris Farrell is senior economics contributor for "Marketplace" and Minnesota Public Radio.