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Debunking the Myth of a Boom in Boomer Entrepreneurs

Entrepreneurship has been having its own kind of senior moment. Organizations including the Kauffman Foundation and AARP have shown increased interest in helping older Americans start businesses, while others have painted senior entrepreneurs as an untapped source of economic growth.

It’s an appealing idea for policy thinkers and workers alike: Out of necessity or by choice, three-quarters of boomers expect to remain in the workforce past the age at which they’re eligible to receive Social Security, according to Gallup. For many, a stint running their own ventures may prove an appealing way to stay active and pad savings for an eventual retirement.

But the rise of boomer entrepreneurs isn’t happening yet. Self-employment rates among Americans on the cusp of retirement have been decreasing steadily for the past two decades, according to a recent report (PDF) from the Small Business Administration’s Office of Advocacy. And the rate for Americans 55 to 64 is falling faster than the rate for all ages.

Why the decrease? The Office of Advocacy report suggests rising health-care costs for the self-employed play a big part in chasing would-be entrepreneurs into salaried jobs. If policymakers really want to boost senior entrepreneurship, they should pay close attention to how the self-employed fare under the Affordable Care Act, the report suggests.

After all, people approaching retirement age are likely to have greater medical needs than twentysomethings. If they have preexisting conditions, health benefits from an employer may have been their only option to get coverage. If the health-care law allows them to get coverage independent of their corporate jobs, more boomers may decide to hang a shingle.

Clark is a reporter for Bloomberg Businessweek.

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