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    11 Replies Latest reply on Mar 16, 2010 12:52 PM by rdemarce

    Facing retirement in 16 months

    z7119gt009 Newbie
      I have had a home based (Limited Liability Company in food service for several years. Now that I am looking at retirement, I want to become more active in my business. To do so, I am looking at spending $50.000 dollars.
      I want to be careful not effect my retirement income. I am toying with the idea of using a portion of my 401k instead of borrowing the amount I need. Any feedback, or suggestions?
        • Re: Facing retirement in 16 months
          LUCKIEST Guide
          Facing retirement

          You should be looking forward to retirement, not Facing retirement.

          Go to Members page and share some info. Also I would suggest you develop a Business Plan and visit your local SCORE office. SCORE is FREE
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            • Re: Facing retirement in 16 months
              z7119gt009 Newbie
              No question about it! I have worked for my present employer for 31 years and I am excited about the prospect of not punching a clock and throwing my alarm clock out the window!
              • Re: Facing retirement in 16 months
                UncleLeon Scout
                Well, I'll tellya, Luckiest....I (for one) disagree.

                IMHO - - - -

                Looking forward to retirement is what you do before you retire.

                Facing retirement is what you do after you've retired.

                And this is not a question of money.

                When you've operated your own business and controlled manpower, machinery, space, money and time for over 30 years and then retire; ya ain't controlling nothin'...it's like .....well.....doing nothin. --> at least nothing constructive.

                Of course, if you are an "employee; then looking forward to retirement so you can operate your own business, is a very positive thing.
              • Re: Facing retirement in 16 months
                phanio Pioneer
                It really depends on your personal financial situation - thus you need to make a pros and cons list of the benefits and costs of each avensue you have then pick the one that will provide the biggest benefit at the lowest costs.

                Using your 401(k) can be a good way to raise capital - but, make sure you understand the tax consequences. I have seen others take their 401(k) - convet that into a trust - then require the trust to invest in your business - but, there are always tax issues you have to deal with first.

                If you own a home - that might think about taking the equity - cheaper loan costs and tax benefits of writing off interest and such.

                Other ways to bootstrap could include applying for or using personal or business credit cards. These can be used just like lines of credit - pay for what you use and with the new rules in place are easier to manage given that issuing companies can not just raise rates or charge fees without notice.

                Business Money Today
                www.BusinessMoneyToday.com
                • Re: Facing retirement in 16 months
                  alytus Scout
                  my advice is, borrow the money, make a updated buisness plan, and keep your 401k in your personal portfolio.
                    • Re: Facing retirement in 16 months
                      z7119gt009 Newbie
                      Here's the deal,
                      I have created four barbecues sauces that are now being patented, rubs, wet and dry for beef, chicken, pork and lamb. Have a smoker which can smoke up to 425 slabs of ribs in four hours. Which direction I choose to finance my adventure will be short lived, because barbecue,smoking and sauces was a 500 billion dollar business last year. I believe I have an excellent product. I love doing this, look forward to spend my leisure time smoking ribs, brisket etc. for a long time.

                      I prefer not strapping myself with debt at retirement, I want to enjoy myself and have fun doing what I love. Hope this make sense?
                        • Re: Facing retirement in 16 months
                          ChaoticFate Newbie
                          Hey there...

                          Sounds like you already thought about this for a long time. Here is my personal opinion don't go into your 401k. It is the only thing making you interest. I rather take out of my equity like another said here, get a SBA loan or other form of loan, build up your business credit. I would also strongly suggest not using a personal credit card like someone said before me. Granted because of the new laws implemented earlier this week it might sound like a good idea over a business credit card... but it could drastically change your credit score. But whatever you do, put it in your business name.

                          To Our Success,
                          --JIM
                      • Re: Facing retirement in 16 months
                        Newbie
                        I would let the 401k ride itself and persue other options, possible loan.

                        Without knowing your full intentions with the business, you may be able to grow the revenue with online marketing with far less capital investment! It may even take you into additional streams of income.

                        Research online business a bit more or ask me any additional questions you may have. You may want to talk with your tax advisor or accountant as well.
                        • Re: Facing retirement in 16 months
                          MainSt. Newbie
                          Ok. First there is nothing wrong with using your retirement to fund your business because this is an option that one has just like having the option to obtain a business loan. However there are factors to consider before making this option your first choice. If I were in your situation and I had good credit I would recommend obtaining a small business loan first. Remember, your retirement funds are your nest egg that you would be gambling with if for some unexpected reason the business fails. But we do not want to think like that. Now there are options for funding your business venture with your retirement funds and are very beneficial tax wise. I know people who have utilized they're 401k's to purchase real estate without a personal guarantee, and sell the property to earn cash to fund there ventures. Remember its all about thinking outside the box. As we speak, the majority of banks that took TARP funds are not lending to small businesses which is making it harder and harder to obtain small business loans. However there are alternatives such as microloans and building corporate credit that helps ease the pain of finding funding for your company. I really hope your venture turns into a success........I love BBQ!!!

                          Mainstreet Etc.
                          • Re: Facing retirement in 16 months
                            petercalka Wayfarer
                            Open an internet based chain of stores in USA.
                            Get a line of products which all Americans are looking for
                            Set up a system of cooperation with major drop shipping companies, attitude to you and your clients.
                            Check their products and pricing.
                            Find a way to have simple and efficient accounting system.
                            Visit Asia, especially China, Indie, look at E bay, and Amazon, I offer.
                            Start your Twitter, Facebook, My space, Buzz, and
                            Find nice sunny peaceful place with great internet connection and you can enjoy steady, growing income,
                            with huge upside potential.
                            I really wish i had your problem.
                            Good luck
                            Peter
                            • Re: Facing retirement in 16 months
                              rdemarce Newbie
                              it really just depends on the interest rate. Look and see what your 401K is earning and compare that to the interest rate of a loan. It doesn't make sense for you to pay more than you earn on your 401K. I would use my 401K regardless, because it's pointless to go further into debt when you don't have to. You may initially lose the 50,000 from your retirement, but you can replace that because the income you're going to be making from your business is just that....income. It's not going back to paying a loan.