From the second half of 2020 through May 2021, the Census Bureau tracked the highest number of applications to form businesses since the records started being kept in 2004, a recent report from the National Bureau of Economic Research found. According to 2019 data from the Kauffman Foundation, nearly 65% of entrepreneurs use personal and family savings to fund their start-ups. The Global Institute for Experienced Entrepreneurship advises that instead of tapping retirement funds, the institute advises crowdfunding to get a business off the ground. “If you put your idea out there on Kickstarter and no one is willing to invest even a dollar, you know before you put in a huge amount of time that it might not work,” said Elizabeth Isele, the institute’s CEO.
Other tips to consider before dipping into retirement funds: 1.) Plan ahead financially-make sure you have 6 months of mortgage money reserved. 2.) Start Small. 3.) Find a niche market 4.) Consider the worst-case scenarios. 5) after withdrawing from your 401(k) early, you will owe penalties and taxes.