From Pensions to Passions
By Lavanya Sareen

From Pensions to Passions: The Economics of Retired Entrepreneurs 

Growing old? Inevitable. Retirement? Package deal. Most workaholics who have spent much of their lives driven by salaries or an insatiable urge to achieve often find themselves handicapped or restless after retirement. They more often than not find themselves trying to look for work not just for the purpose of earning a living but also to do something meaningful.

In India, the average life expectancy has risen to around 70 years, while the formal retirement age remains roughly 58–60. Only way to escape this gap in this start-up based 21st generation? Yes, entrepreneurship. Traditionally, retirement has been based on the life-cycle hypothesis developed by Franco Modiglian which revolves around the notion that people tend to choose a level of consumption they can maintain over the course of their lifetimes. However, fast moving times call for fast evolving models. This phenomenon, coined the rise of “retired entrepreneurs,” although mistaken as a sociological trend, in reality is a fascinating economic shift which challenges traditional assumptions about labour participation, productivity, and economic ageing.

According to the World Health Organization(WHO), approximately 14% of adults aged 70 and over live with a mental disorder. By being actively involved in a business, taking charge of things, the issue, if not mitigated can be solved to some extent. Moreover WHO also shares a concerning report stating that by 2030, one in six people in the world will be aged 60 years or over, which in many economies would lead to myriads of problems such as shortage of labour force, excessive pressure of the government to provide healthcare to the aged and many more. However, today’s evolved economy can minimize the repercussions of the ageing population through its start-up culture, stimulating growth of the economy hand in hand with the welfare of the population. Inclusivity in labour markets and financial independence of the retirees makes them less vulnerable to abuse by their caregivers which is not uncommon nowadays.

Young entrepreneurs face a lack of experience which they compensate by passion and risk taking capabilities. In contrast, retirees are endowed with years of work experience, a polished skill set and a vast pool of social knowledge. These intangible assets though undervalued in traditional labour markets are now effectively being  monetized through start-up culture. This is illustrated by Gary Becker’s Human Capital Theory which views education, training, and experience as investments that enhance a person's productivity and future earnings. 

With the proliferation of technology  and affordable online business models, entering the markets is easier than ever. According to a report by NITI Aayog, published in 2023, over 10% of Indian entrepreneurs above the age of 55 have launched businesses after their retirement in sectors such as education, wellness, and handicrafts, owing it to the low investment capital requirement, ease of business and  the ability to work from home. The “gig economy”  and “platform capitalism"  are responsible for normalising self start-ups, rendering age-inclusive participation.

Instead of letting pensions or savings of their lifetime sit idle in the bank accounts with minimal interest rates, the retirees invest it into micro-enterprises, creating localized multipliers. Funds therefore circulate as investment and employment generation in small businesses. In India, many top banks; not just government but also private, offer a variety of subsidized loan rates enabling the elderly to start their businesses with utmost ease. 

As far as real life examples go, the first and foremost is Colonel Harland Sanders, who franchised the popular Kentucky Fried Chicken at the age of 62. Padmaja Reddy is a retired banker from Hyderabad who  founded Spandana Sphoorty Financial Limited, which is a leading microfinance institution of India. Similarly, Shanta Dutta, a retired teacher, founded an online education platform for the senior citizens in Kolkata to keep them well equipped and up to date. These micro-successes bring to limelight the latent economic energy within the retirees.

By staying economically active, retirees stay physically and mentally active as well, delaying if not entirely avoiding their withdrawal from the labour force until absolutely necessary. Countries like Japan and Germany are visibly facing shortage of labour force which is mitigated by the ageing population entering the labour markets. In India, we are endowed with a well planned demographic dividend and an inclusive elderly workforce guarantees a balanced long-term dependency ratio; the proportion of dependents in comparison to the working-age population. Maintaining this balance is crucial because if a handful of people are working to support the majority of the population, it causes a threat to public finances and economic growth.

At the policy level, programs such as Atal Innovation Mission and Startup India might be extended to senior entrepreneur groups. Additionally, establishment of Senior Entrepreneurship Hubs which are similar to Japan's Silver Human Resource Centers which provide part time jobs to individuals above the age of 60 would help support and organize senior led businesses.

The era of retired entrepreneurs challenges the binary notion of work and retirement. It leads to a structural evolution in the labour market and a cultural evolution in how societies perceive ageing. It is a call for economists to re-evaluate the traditional models and theories and make them inclusive for all ages of the population.

Examples of Colonel Harland Sanders, Padmaja Reddy, Shanta Dutta along with a number of retired teachers working as tutors, old women starting lunchbox services and cloud kitchens prove that this trend is no longer a mere anecdote but the dawn of the much awaited economic revolution which will harmonize life-cycle theory with real-world adaptability. The pension, once seen simply as a means to an end, is now being effectively put to use to start a legacy of new beginnings- planning seeds for innovation, independence, and inclusive growth. With no iota of doubt, when experience meets opportunity, the result is a new breed of entrepreneurs who prove that the economy, much like life itself, rarely retires.