KANSAS CITY, MO--(Marketwired - Oct 25, 2013) - A recent article posted by USA Today explored one of the latest risky baby boomer trends, retirees using 401(k) or IRA savings to fund their dream businesses. According to Ron Sanders, CEO of ONE Retirement, using retirement assets for such a venture dramatically shifts the balance between risk and reward, but baby boomers can even things out by following some simple advice.
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Sanders said, "We have had several clients use this sort of funding mechanism in order to start their business ventures. For anyone thinking of funding a start up business in this manner, there are two fundamental issues to consider. First, make sure the transaction and supporting documents are prepared by a professional. This includes the type of entity structure used to form the business. One wrong move and you can cost yourself thousands in taxes and penalties. Second, keep in mind that you are dramatically shifting the risk exposure of your retirement assets. Your entire retirement future is dependent on the success of the business venture. If you feel that you must use retirement assets, it would be wise to not use your entire nest egg. Treat the business venture as just another asset in a well-diversified retirement portfolio," said Sanders.
The USA Today article provided similar advice, saying that a general rule was that those who experienced financial success in this manner were the people who did homework. Consulting a highly qualified firm could also aid in balancing the risks and rewards.
ONE Retirement, LLC is an independent registered investment advisory firm based in Overland Park, Kan. with a history of providing investment services to institutional investors, private companies and affluent families. Like ONE Retirement on Facebook, follow the company on Twitter or read the blog for more information about retirement planning tips and free white papers, webinars and resources.