Growing Late Bloomers

How to start something new late inyour career—and still protect your retirement.

Thinking about starting

a business later in your career? The statistics can be off-putting: Some 20 percent of small businesses fail within their first year, according to the Small Business Administration, and only about a third survive 10 years or more. In most cases, that means you may be facing financial failure just as you’re ready to stop working.

“You have to know your own money and have your own financial security, or you are taking an unnecessary risk,” says Ilyce Glink, a friend and fellow personal finance journalist. Glink was 51 when she started Best Money Moves, a financial-advice employee benefit company based in Glencoe, Illinois, and she knew whatever she did to launch her new business had to not derail her family’s retirement prospects.

But as a serial entrepreneur, who’d previously started a communications agency and a media company, Glink had an idea of what to expect in terms of startup costs and payoffs—and how to avoid draining her retirement savings. So if you’re thinking about starting something new, follow her example.

Know your numbers

If you’re approaching or past age 50, check on your retirement readiness first. Vanguard, Fidelity Investments, Kiplinger, and TIAA all offer web-based calculators that can give you a quick snapshot of your financial situation.

Glink and her husband, Sam, have been saving 20 to 25 percent of their income since they started working, so they have substantial 401(k) assets. They’ve largely paid off their home, and they get regular income from rental properties, so they should have plenty of money to sustain their current lifestyle.

Glink had also sold her interest in a previous business, the publisher of Medicare NewsGroup. Because this money was an unexpected bonus, rather than something she was counting on to finance her retirement, she felt comfortable dedicating it to the new venture. “The question I asked myself was: If this fails and I lose all this money, am I still fine?” Glink recalls. “The answer was yes. It wasn’t like, if I lost this, I was never going to be able to retire.”

Have a plan

You don’t necessarily need a formal business plan—the type required to get outside financing—at the outset. But you do need a clear idea of what your product is; what it will cost to produce; why people would want to buy it; and whether they’d be willing to pay enough to make the business profitable in a reasonable period of time. You also need to know how you are going to support yourself and your business in the interim, which could last several years.

“If you’re expecting this company to create a financial windfall in the first year or two, you have to adjust your expectations,” says Ross Polking, lead adviser with the Foster Group, a Midwestern wealth-management firm. “You have to be ready to live off zero income for a couple of years.”

Be ready to adapt

Even if you have a perfect business plan, expect that your numbers will change. About a year ago, for example, Glink realized that her company needed more money to hire seasoned salespeople and develop its products. Adjusting to those realities is normal—but you need to keep close track of how quickly you’re burning through cash, and when you need to start replenishing it. (And give yourself enough time to do so: Bank loans can take months to secure, and lining up venture capital can take longer.) Glink started talking to angel investors, and eventually completed two rounds of outside funding. “I’m running a company called Best Money Moves. If I didn’t know what the best money moves were for us,” she quips, “what would that say about our business?”

KATHY KRISTOF, author of Investing 101, is an award-winning financial writer and journalist.