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Personal Finance FAQ

Becoming an Internet Entrepreneur for Your Retirement Plan Isn’t a Retirement Plan

A rose by any other name would smell as sweet.
–William Shakespeare

A recent article in Forbes magazine claims that Baby Boomer retirees are looking to have a “new entrepreneurial retirement” by starting online businesses.

The title of the article is “Just In Time… Baby Boomers Discover A New Way To Retire.”

What the author of this article is advocating is not retirement.

It’s changing jobs.

If you are planning on earning income by working as your retirement plan, you’re not planning for retirement?

Why?

In my mind, retirement, whether FIRE, PIRE, or a more traditional retirement, is one where you are not dependent on work-based income to make ends meet. If you’re not there, then you’re working.

If you call it “Internet Entrepreneur Retirement” or “Changing Jobs,” the outcome is still the same: you’re putting in effort in exchange for pay (or, in this case, the hope of pay) in order to pay for your expenses.

Plus, going the “Internet Entrepreneur Retirement” route adds even more risk.

Why You Shouldn’t Plan on Being an Entrepreneur to Supplement Your Retirement Income to Make Ends Meet

One word: failure.

As the author outlines, the easiest way to get started is to start your own blog (#aff). You can get started for CHEAP as long as you’re willing to put the time in to learning the basics.

But, do bloggers make money?

First off, let’s look at your competition.

In 2020, there will be 31.7 million bloggers. That’s over 10% of the population of the United States, 1 person relying on 9 others to pay them enough to make a living.

23% of those blogs are from people who are age 45 and older (including me).

There are 70 million new blog posts per month, meaning that, on average, each blog is publishing at least 2 pieces of content per month.

Throw up some ads (like I have), write on something about which you think you’re an authority (I’m a Certified Financial Planner, so I’m supposedly an authority on personal finance), write occasionally, and voila! GOBS OF CASHOLA!

How does that work out in reality?

A 2014 survey (when there were a lot fewer fish in the sea) showed that 63% of bloggers made less than $3.50 per day. 9% made over $1,000 per month.

So, if you’re quitting your job with a $1,000 gap between retirement income and retirement spending and you’re planning on becoming a blogging wizard to make up the difference, as the author of the article I quoted at the top suggests, you have at least a 91% chance of not succeeding. It’s probably higher. After all, there are 4.3 million more blogs now than there were in 2014.

Furthermore, during COVID-19, Internet ad revenue is projected to drop by 18-19%. More fish. Fewer plankton.

If you’re thinking about quitting your job and then funding the remaining gap in your retirement income by becoming an “Internet entrepreneur,” please don’t. Stick to your job. Save more. Determine your true retirement budget. Come up with a viable plan rather than putting your money on double 0 on the roulette table and hoping to make it big.

If you want to dabble in starting an entrepreneurial venture to see if you can make it into something viable, then, by all means, go for it. After all, we were able to retire at age 46 and 45 off of the back of my entrepreneurial ventures (and an awesome spouse. I’m a huge fan of entrepreneurship, as you can make incredibly outsized returns via entrepreneurship.

But don’t bet the farm on becoming the next Jeff Bezos or Mark Zuckerberg, particularly if your retirement depends on it.

Planning on becoming the next Bill Gates in retirement? Let’s talk about it in the comments below!

By

Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

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