When couples retire—and then start a business

Being entrepreneurs offers retirees extra income, togetherness and challenges.

  • By Cheryl Winokur Munk,
  • The Wall Street Journal
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For some couples, retirement is a time to stop working and relax together. For others, it’s a time to start working, together.

Specifically, they’re launching businesses.

They’re doing so for reasons that can be financial, emotional or both. On the financial side, consider that a 2017 study by the American Institute of CPAs found that nearly half of nonretired adults in the U.S. said they weren’t confident they would be financially prepared to retire when it was time. Working together is an opportunity for some couples to turn a hobby or long-held passion into a crucial source of income.

Then there’s the emotional aspect. As people expect to live longer and healthier, they’re increasingly looking to retain the kind of stimulation and challenge they enjoyed in their working years. At the same time, by working together, couples can stay connected in a way they weren’t always able to when they were pursuing individual careers.

“We’ve got a lot of life left, and we’re not ready to hang up our spurs,” says Craig Carpenter of Fort Collins, Colo., who with his wife, Sandy, operates a business renting out baby gear through the online platform BabyQuip. Ms. Carpenter, 65 years old, hunts down baby-equipment deals, and Mr. Carpenter, 67, handles the computer side of the business and the marketing.

The Carpenters say the business—which started paying for itself after the first few orders—allows them to make some extra money in retirement, without being too taxing on their time. They get to set their own hours, which allows them to do other things they love, such as spending time with family, tending to their horses and potbellied pigs, and camping. “It works around our life. Our life doesn’t work around it,” Mr. Carpenter says.

There are, of course, ways such togetherness can go wrong. Financial advisers who work with couples running businesses together warn that without careful planning and execution, it can put significant financial and emotional strain on a marriage. “It’s easier said than done,” says Doug Amis, chief executive of Cardinal Retirement Planning Inc. in Durham, N.C., who works with several couples who have gone into business together after retiring from their full-time careers.

Plenty of questions

Ideally, couples considering setting up shop in retirement should begin discussions while they are still working, says Kyle Whipple, a financial adviser with C. Curtis Financial Group in Plymouth, Mich. This gives them ample time to discuss the specifics of a potential business and the type of lifestyle they want to lead, he says.

He recalls one couple, now in their mid-50s, who a few years back were excited by the prospect of starting a business together after they retired, but they couldn’t agree on basic details. At the time, the husband was gung-ho about running a bed-and-breakfast, while the wife was pushing to buy a food truck. While they still talk about doing some type of joint business venture, they realize they have major planning to do first, he says.

Indeed, there are financial, operational and emotional decisions to consider before starting out. On the financial and operational side, couples need to ask themselves a host of questions, including:

• How much money would the business need to make to be worth the effort?

• Where will our funding come from?

• What is the projected time commitment for each of us?

• How will the business be managed day-to-day?

• Will we need to hire outside help—and can we afford it?

• What is our exit timeline and strategy?

• What is our plan if one of us wants to exit before the other?

Couples also need to keep in mind that there may be limits to what they can earn without affecting Social Security payments if either one is younger than full retirement age.

On the emotional side, spouses should aim to honestly assess whether they have the right business chemistry. For instance, do they have the personalities that will complement each other in business—or is one spouse likely to overpower the other when it comes to decision-making? If both spouses are strong-willed, does each have the ability and desire to compromise?

“If you routinely argue about something as trivial as whether the toilet paper hangs in front or in back of the roll, you’re in for some bigger arguments on inventory or business development,” says Mr. Amis. “And there’s bigger dollar signs attached to it.”

Each spouse also should identify what he or she hopes to get out of the business. Then, the couple should determine together whether they have similar desires or have different and incompatible expectations.

Another issue to discuss are the potential trade-offs. For example, running a business could interfere with travel plans or leave less time to spend with grandchildren. Couples also should consider whether they will have too much time together, such that their marriage becomes strained.

“A lot of people really like the idea, but once they talk about the nitty-gritty, they decide it’s something that sounds better in theory,” Mr. Whipple says.

While couples need to have frank discussions together, Mr. Whipple also recommends they run their ideas by a close friend, a financial adviser or accountant to help them identify questions and concerns they might not otherwise have thought of. Sometimes couples can get caught up in an idea, but once someone asks them pointed questions about real issues, they become more circumspect, he says.

Brian Parker, co-founder and managing director at EP Wealth Advisors in Torrance, Calif., tries to simulate for couples various things that could go wrong, such as higher-than-expected startup costs or a significant business loss. Through this analysis, he helps them try to determine whether their finances would be able to withstand the various pressures.

Establishing roles

Couples who own businesses together in retirement say it’s important for each spouse to have distinct duties so they don’t step on each other’s toes. This was particularly important to Caryn Arrowood, 57, who owns and operates Montemar Wines in Lompoc, Calif., with her husband, Steve, 59.

“I had to have my own job,” says Ms. Arrowood, a former finance manager at Raytheon Co. “There needed to be clear definition of what he was responsible for versus what I’m responsible for.”

Mr. Arrowood retired in 2012 from his sales position at Raytheon. He told his wife, who was still working, that he wanted to use this time to focus on the wine business they had incorporated in 2009 after two decades of making wine in their garage for friends and family. Initially, she was reluctant to leave her full-time position out of concern she’d be tied down to a job at the winery that she didn’t love.

Their solution was to carve out a role that she would be happy with—a managerial one in which she had decision-making capabilities. She handles the financial side of the winery, while her husband does the winemaking, which complements both their strengths. In addition, they hired a compliance professional and an accountant—functions neither of them had the time, expertise or desire to do. The Arrowoods say the business has broken even and is on track to beat initial expectations.

Another potential issue is when couples aren’t on the same page about work vs. more typical retirement activities like travel. The Arrowoods say they are happy to have built a small but growing business together and still have time to travel several weeks a year and do other activities they enjoy, collectively and individually. “You have to like the job that you’re doing, otherwise it could lead to tension and frustration,” Ms. Arrowood says.

Making compromises

Over the course of their 15 years in the bed-and-breakfast business, William Seavey, 71, and his wife Eleanor, age 69, have had some conflicts over how much time to spend on the business.

Mr. Seavey prefers not to have guests at their Cambria, Calif., home more than three or four days a week, but his wife sometimes finds it hard to turn away business. At first, there were some hard feelings because she booked guests without first getting his buy-in. But after he stormed off in anger a few times, she started checking with him before accepting reservations.

Mr. Seavey says it’s not always easy, but couples who are business partners can’t afford—on a personal or professional level—to let conflicts fester. “When you work with your spouse,” he says, “you can’t simply go home at the end of the day and ignore the issues.”

The Seaveys recently made the joint decision to scale back a bit more and try to enjoy life in other ways besides their business. For example, they served a year-long stint as co-presidents of a local couples dance club, and they travel frequently. While working and being in business for themselves is a “juggling act,” Mr. Seavey says, it’s hard to imagine them not working in some capacity. “We don’t want the traditional retirement,” he says. Their income goes toward property taxes, various home expenses and travel.

Together too much?

Another factor for couples to consider is whether a jointly run business will mean too much time together.

The Carpenters say their arrangement works well because they aren’t spending their entire day working together on their baby-equipment business. At their busiest, in the summer and around holidays, they put in about 15 to 20 hours a week, Ms. Carpenter says.

For the Seaveys, dividing job responsibilities helps them maintain the balance necessary for the bed-and-breakfast to run smoothly. They say they are both strong-willed and opinionated, so taking on different roles helps ensure they generally aren’t at odds. He’s the handyman and marketing and promotions guy. She shops for supplies, makes furnishing decisions and plays hostess when they have guests.

In the Arrowoods’ case, each spouse spends significant time pursuing his or her own interests apart from the business. She spends considerable time with friends and family near the couple’s home in Los Angeles, while he often stays at their home in Lompoc, closer to the winery, so he can be hands-on in the winemaking process. They travel together, but he also takes trips on his own, such as one to Mexico earlier this year to see concerts by Dead & Company, the successor to the Grateful Dead.

“Couples have to find their own happy medium—the balance that works for them as far as independence and their own interests and their own time,” Ms. Arrowood says.

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