BMO Financial Group

BMO Financial Group

January 29, 2013 09:00 ET

BMO Study: Two in Five Canadians Open to Being Their Own Boss in Retirement

- Forty per cent of Canadians likely to start their own business in retirement

- Top reasons to start a business in retirement include additional income, staying mentally sharp and using it as a hobby

- Retirement savings identified as top funding source for starting new businesses

TORONTO, ONTARIO--(Marketwire - Jan. 29, 2013) - According to a study released today by BMO Financial Group, many Canadians envision becoming entrepreneurs during their retirement years; 39 per cent say that it is likely they will start their own business after they reach retirement age (65 years old). More generally, 81 per cent plan on working in some capacity during their retirement.

The top reasons identified by Canadians for starting their own business in retirement are:

  • The need for additional income (75 per cent)
  • A desire to stay sharp/mentally focused (62 per cent)
  • It would be an enjoyable hobby (53 per cent)

"It's clear that many Canadians are looking to generate additional income during their retirement years," said Marlena Pospiech, Senior Manager, BMO Wealth Planning Group, BMO Financial Group. "People are living longer than ever before so, for an increasing number of Canadians, retirement savings may need to last more than 25 years. Additionally, with the decline in employer-sponsored defined registered pension plans and reforms to government pension plans, there's now a greater need for people to supplement their income during retirement to compensate for that income gap. This is particularly true for those who haven't been saving aggressively for retirement through retirement savings vehicles such as RRSPs and TFSAs."

Other key study findings:

  • Men are more likely than women to start their own business in retirement (46 per cent vs. 33 per cent).
  • Those in Alberta are the most likely in Canada to start their own business in retirement (53 per cent); Quebecers are the least likely (25 per cent).

Ms. Pospiech added that Canadians are getting creative in how they picture their retirement; many view a gradual transition from work to full-time retirement as the optimal choice. She noted that not only does working longer benefit your bank account by generating additional income, it also helps keep retirees mentally active, involved in the community and contributing to the larger economy.

Funding a small business in retirement

The study also found that, when asked about how they plan to fund their business, almost half (47 per cent) of Canadians responded that they would use a portion of their retirement savings. Other funding sources pre-retirees said they would consider include:

  • A separate savings account earmarked for a business (43 per cent)
  • A loan from a bank or another source (34 per cent)
  • Their inheritance (21 per cent)
  • Family/friends (14 per cent)

"While it may be tempting to draw on retirement savings to fund your post-retirement business, there are other options available," said Steve Murphy, Head of Commercial Banking for BMO Bank of Montreal. "It's important that those looking to start a business have personal retirement savings, as well as savings set aside to fund their retirement business along with a business plan. A financial professional can help you develop a strategy that incorporates saving for retirement, as well as a post-retirement business."

For those who are considering starting a business when they retire, BMO offers the following tips:

  • Do your research: Take advantage of the resources and networks you have built over the years and learn all you need to know to set up your company. Look to replicate successful business models, gain industry insight and learn about the marketplace.
  • Develop a plan: Draft a business plan that takes into consideration your competition, the products and services you will offer, potential customers, sales targets and what you will need to cover your costs.
  • Consider the pros and cons: Think carefully about how you envision your ideal retirement lifestyle and consider consulting your spouse, family and friends on their opinions. Determine why you want to start your own business and how this will impact your retirement income and lifestyle.
  • Alternative sources of income: For retirees simply looking for additional cash flow, determine if starting a business from scratch is right for you. Look at alternative options that are not as time-consuming such as part-time jobs or contract work.
  • Seek outside advice: Speak to an accountant and a small business banker - financial specialists who can provide insight into setting up your company, market competition and personal and business capital needs. Also speak with your financial planner/advisor who can help determine the right financial plan for you and your business.

For more information on starting a small business, please visit:

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The results cited in this release are from a Pollara survey with a sample of 1,000 Canadians 18 years of age and over, fielded online between January 17th and January 22nd, 2013. A probability sample of this size would yield results accurate to ± 3.1 per cent, 19 times out of 20.

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