In my opinion, it's perfectly fine to take risks. But sometimes risks have to be based upon good calculations.
NewChapeter12 wrote:I'm 40yrs old and I've been in middle management for a major company for the past 19yrs. My wife has grown her hair/makeup business to the point she is ready to open a salon. She has no business sense, but lots of great ideas. I have no doubt our salon concept is going to be a lucrative business.
The first piece of advice, if the OP hasn't done it, is to create a business plan. It's interesting that someone in a "middle management" position can say that the concept will be lucrative when there is the possibility that after doing a business plan, identifying the competition, understanding the current economic conditions, developing marketing strategies, and financial analysis of Basic expenses and income, that there just is enough to break even. I've noticed maybe 2 or 3 new nail salons opened in the recent past in my town, just how many are necessary, or are they 'cover' for something else?
I currently have $50k in a 401k plan, and $50k in a Cash Pension Plan. I also have $11k remaining on a loan from the 401k. I'm debating to cash out the pension and roll over the 401k to an IRA. I'm sure the first year in business we will have a lot of write offs and can offset some of the 20% tax hit on the pension cash out. I'd love to roll everything over to IRA and only pay taxes on the outstanding loan, but I need some cash to work with the new business..........oh, I forgot.....send the wife to night school to learn about business concepts.
Please don't touch Your retirement. Just think . . .If you let that $50K grow over the next 20 years at a compounded rate of 7%, money will double every 10 years and grow to $200,000 by the time you're 60. If you cash it out and invest in a business in which at least 75% small business fail . . . it'll be difficult to catch up.
But counter to that opinion, I have a short story. A guy I knew who was about 50 years old wanted to leave his government job to start his own business. He cashed out his retirement plan and bought the trucks and equipment needed for his business. But, there were limited customers. After 6 months he had to sell everything, taking a 50% loss on his equipment and trucks just to get out. He could not join back into the 'retirement' plan with the money he had withdrawn. But decided to go back to work at the same job. Problem . . . he died a year later. The moral, if there is one, just because you follow your 'dream' doesn't mean it will pan out. But sometimes just doing it can make you feel like you've done something. One the other hand, all that busy work was for nothing. And therefore, sometimes, it's never greener on the other side of the fence. You might not like working long hours at your current job, but if you have health care benefits and a pension plan, sounds like a big gamble to test on a business concept that might not have a Business Plan. Work out the Business Plan, Open the shop, but keep the day job! Oh, I forgot, maybe the wife should take some night College courses to learn some business concepts so you are both on the same page.