Why are more over 50s becoming self-employed?

But would it surprise you to learn that this age group grew in size by more than all others combined?

That’s the findings from the 2023 edition of IPSE’s Self-Employed Landscape Report, published last week, providing a definitive profile of the solo self-employed sector.

With self-employed headcount otherwise experiencing sluggish growth, just why are 50-59 year olds bucking the trend?

Triumph over turbulence

In 2023, the number of 50-59 year olds in self-employment was almost 1.2 million – a seven per cent increase on the previous year.

This isn’t just because lots of 49 year old freelancers had their birthdays (I really did check this). In fact, the 50-59 cohort are consistently ranked as the most populous age group in self-employment.

Part of the answer lies in the increasing longevity of self-employed businesses. More than two fifths (42%) of the solo self-employed have operated in this way for 10 or more consecutive years – a 1 per cent increase on the previous year.

We also know that the over 50s tend to have larger financial buffers, which would have made them more resilient to the impact of the pandemic – a setback that put many others out of business.

Furthermore, close to 475,000 new solo self-employed businesses started up between 2022-23, whilst around 370,000 solo businesses ceased trading. This is not an atypical level of churn for the sector, but it is increasingly skewed towards younger age groups. With economic conditions in mind, this further speaks to disparities in financial security between age groups.

Employment loses its lustre

Within self-employment, last year saw a dramatic 27 per cent increase in the number of over 50s 'freelancers' – that’s self-employed workers in the top three most skilled occupational categories. Think of highly skilled managers, doctors, lawyers, writers, artists and similarly skilled roles.

This transformation of the sector’s skill profile could in part be driven by negative perceptions of their employment prospects, especially after losing a job.

Research published by the Centre for Ageing Better in 2021 found that 17 per cent of 50-69 year olds had experienced ageism in recruitment directly, being turned down for a job due to their age. Meanwhile, nearly a third (29%) were told they were unlikely to be successful in going for a job due to having ‘too much experience’. And more than a third (36%) – more than any other age group – believed their age put them at a disadvantage in their job hunt.

This comes alongside figures from the Resolution Foundation in 2021 suggesting that the employment rate of the over 50s fell by 1.4 percentage points following the pandemic – double the decline experienced by those aged 25-49.

What we may therefore be seeing in today’s self-employment statistics is a greater volume of experienced professionals feeling that freelancing – not employment – is their best option.

It is of course unfortunate for those who had no plans to leave employment and were happy with their career trajectory.

But for very many of them, a pandemic induced redundancy merely fast-tracked their existing plans for a freelance future.

The right tools at the right time

In fact, we know from IPSE research published in 2022 that just under a quarter (23%) of employees aged 45-54 could see themselves going freelance in future.

Interestingly, this age group were by far the most confident in their capabilities as self-starters, being four times more likely than under 35s to say they didn’t need any advice before launching a future freelance venture. They were also far less likely than younger groups to say they needed help with areas such as structuring their business, creating business plans and setting their rates.

Overall, this group of workers were not only thinking about going freelance – they were ready for it.

We can’t know for sure how many of them have since made the move, but we can reasonably expect that plenty did.

Find out more – read the report

Click the button below to get the definitive snapshot of how the self-employed sector changed in 2023, covering the demographics, geography and skill profile of the sector.