Switching to Self-Employed When Heading for Retirement

Abstract

Self-employment allows individuals to extend their working lives instead of accepting forced retirement. This study examines transitions to self-employment after age 50 but before retirement age. The study is based on data from Survey of Health, Ageing and Retirement in Europe (SHARE), in which 16,412 people from 18 countries contributed 24,583 observations. Multilevel analyses were used; the data were pooled into one dataset, in which individuals (first-level variables) were nested within countries (second-level variables). The results reveal that few employees choose to switch to self-employment between age 50 and retirement. Characteristics such as health limitations, marital status, and national unemployment rates affect these employees’ decisions to become self-employed. Given the wage gaps between salaried employees and self-employed and the few employment opportunities available to salaried employees after they reach the official retirement age, the transition to self-employment is a solution for those who need sources of income or wish to remain active after retirement age.