Will Baby Boomers Ever Leave the Stage
The Baby Boomers, that generation of 77 million Americans born right after World War II (1946-1964), have helped shape American culture at every stage of their lives. In their youth, they embraced Elvis and the Beatles, “free love”, and the counter-cultural revolution of the 1960s. In the 1970s and 1980s, most of them traded in the communes and the hippie lifestyle for office jobs. And surprisingly, many of them entered the accounting profession.
Another surprising fact about Baby Boomers is their entrepreneurial spirit. Boomers are twice as likely as millennials to own their own businesses, and 45% of Boomers consider themselves to be entrepreneurs. On a side note, a survey from the Kauffman Foundation found that only about 23% of new businesses were owned by young entrepreneurs as of 2013, down from 35% back in 1996. This indicates that there may be a significant generational shift occurring with regards to how Americans view entrepreneurship.
Today, the oldest of the Baby Boomers are well past what would have traditionally been considered “retirement age”. Millions of Boomers have already turned 65, and 10,000 more turn 65 every single day. But as of 2019, Boomers still own more small businesses than Gen-Xers and Millennials combined. 57% of small businesses are owned by Boomers, which of course gives them a solid majority in this category that they are not likely to relinquish any time soon.
Enjoy the Golden Years or Keep Earning Gold?
As with many other small business categories, accounting firms are predominantly owned by Baby Boomers. This has caused a lot of concern in recent years about the coming Baby Boomer bubble. It has long been assumed that there will be a glut of CPA practices for sale and not enough younger accountants and entrepreneurs out there to buy them. Maybe that day is coming, but it hasn’t quite arrived yet.
It seems that the “Easy Rider” generation might not be in such a hurry to ride off into the sunset after all. With greater life expectancies, Boomers believe they are going to live longer. So, why not spend some of those years continuing to do what you enjoy doing?
This appears to be exactly the mindset many Boomers have. According to a Gallup poll from 2017, a whopping 74% of American adults plan to work past retirement age.
There are several reasons why a large number of Baby Boomers plan to stay in the workforce after turning 65:
- Finances: A large part of the reason for continuing to work is financial. This is not to say that Boomers are any worse at managing their finances than other generations; much of this is due to conditions beyond their control. For one thing, a longer life expectancy means a legitimate concern about outliving your savings. At the same time, fewer Boomers have pension plans from employers, and a much larger percentage have had to save for retirement themselves in a 401K or IRA. And of course, there is always the ongoing concern that the Social Security system might collapse someday, leaving retirees to fend for themselves.
- Demand: The accounting industry mirrors many other fields in that there are fewer up and coming professionals to replace those who are retiring. Baby Boomers are well aware of this, and many of them reason that if their skills are still highly in demand, they might as well stick around and keep earning a good living. The way this sometimes plays out with CPA practices is that the Baby Boomer owner will sell the practice, but then stay on part-time to reassure the current clientele and help the new owner during the transitional period.
- Lifestyle: Baby Boomers have always had an independent spirit, and they are determined to maintain a far more active lifestyle during their golden years than previous generations. Part of staying active is the desire to continue making a meaningful contribution to society through their work.
So, will Baby Boomer accountants and other professionals ever leave the stage? A wise man once said, “time and chance happen to us all” (Ecclesiastes 9:11), so at some point, it’s inevitable. In the meantime, Boomers will continue doing what they have always done; redefine expectations and forge their own path forward.
Selling your firm in this market does take some planning and is filled with potholes and roadblocks. It’s always good to seek out an experienced intermediary that can consult with you on the sale of your practice. Berkshire Business Sales and Acquisitions has been selling firms for the last 10 years in the Arizona market and has first-hand market and deal experience. Contact Ryan Gipple at 602-614-3583. www.berkshirebsa.com