Starting a Business With Your 401(k)? Be Careful.

This is a path that many experts recommend against. “The first thing we tell people is absolutely not to tap into their retirement account,” said Elizabeth Isele, the founder and chief executive of the Global Institute for Experienced Entrepreneurship. Though Ms. Edwards is younger than the entrepreneurs over age 50 the institute is devoted to, Ms. Isele is wary of any risk to a secure retirement.

“One of the sad statistics out there is that so few people have any retirement savings,” she said. According to the New School’s Retirement Equity Lab, 36 percent of 35- to 54-year-old Americans have no retirement savings. At the time of her launch, Ms. Edwards fell into the category of the 43 percent who had less than $10,000 saved. “They’re vulnerable,” Ms. Isele added. “Women especially are in a deplorable position.”

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,” Ms. Isele said. But if the idea proves popular, raising a few thousand dollars on a crowdfunding platform may be doable.

Noah Damsky, a principal at Marina Wealth Advisors in California who has worked with several would-be entrepreneurs considering drawing down their I.R.A.s, has not set a policy of outright discouragement. “I don’t tell anybody what to do,” he said. Instead, he helps them see blind spots. “I’ll work out projections so they understand their risk profile.”

Marianne Nolte didn’t need that kind of help when she started Imagine Financial Services in Fallbrook, Calif., in 2020.

Ms. Nolte, 55, was already an entrepreneur when she decided she wanted to become a certified financial planner. For more than two decades, she had run a video production company. “I thrive as a small-business owner,” she said. “That’s my happy place.” Acting as her parents’ informal financial adviser helped her discover an aptitude for money management. In 2014, she earned her license as a certified financial planner. Five years later, after working at an advisory firm to learn the ropes, she was putting together a business plan that involved tapping her I.R.A.

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