Seniors were warned of the risks when using retirement savings to start businesses by entrepreneurship and senior citizen advocacy officials today.
In interviews following testimony at a U.S. Senate hearing in Washington, D.C. today on elder entrepreneurship, the officials underscored the risk involved in putting retirement nest eggs into a start-up.
“It’s too risky. They can’t control market conditions. They can’t control local economic conditions,” said Kenneth Yancey, chief executive of Score, a nationwide consortium of volunteers who advise would-be entrepreneurs and small business owners.
Tameka Montgomery, associate administrator at the U.S. Small Business Administration Office of Entrepreneurial Development, said her unit doesn’t advocate a blanket abstinence of using retirement money to begin a business. However, she recommended a retiree consult with a financial advisors before taking that risk.
A significant reason the elderly should avoid using retirement money and home equity loans to finance new businesses of their own is they only have a small amount of time to recover if something bad happens, said Greg O’Neill, director of the National Academy on an Aging Society.
However, when seniors finance and run a small business properly, he said it can increase their standard of living in retirement.