Randy Biehl spent 25 years as a U.S. probation and parole officer. Now he owns and runs his own winery in Upstate New York.
Suzie Ford was an out-of-work banker and her husband, Todd, was a career airline pilot who, in Suzie's words, "never saw his family, but loved to brew beer at home." Now they own a brewery in Charlotte.
Jan Morris was a part-time lawyer and part-time art teacher. Then she lost the lawyer part of her job. Now she and her husband, Chuck, own The Hardware Distillery Co. in Hoodsport, Wash.
Call it what you want: living your dream, encore careers or just gambling on your future. These Baby Boomers are doing what they love. And they used their retirement savings to do it, using a process called rollovers-as-business-startups (ROBS) to finance their businesses. With this approach, budding entrepreneurs can use their retirement funds to finance or grow a business without incurring taxes or penalties.
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This is how it works: The retirement account is rolled over into a new retirement fund. And that new retirement fund, in effect, becomes a shareholder in the new business.
Some planners say that type of funding is risky. "You are using your retirement to fund a business start-up," says Katherine W. Dean, senior vice president and managing director of wealth management planning at Wells Fargo Wealth Management. "There is enormous risk in that. You have to factor that in as well."
But David Nilssen, co-founder and CEO of Guidant Financial, says that type of alternative funding may sound risky, but "it can be less risky than using traditional financing." Guidant is a Seattle company that specializes in alternative financing and that Nilssen says has helped create more than 8,500 businesses, including those launched by Jan and Chuck Morris, Suzie and Todd Ford and Randy Biehl. And in none of these three cases are they looking back.
Eveningside Vineyards, Cambria, N.Y.
Randy Biehl, 54, says he was in his 30s and living in suburbia when he and his wife, Karen, first started talking about wine. "Wine people, once they get into wine, tend to be carried away," he says.
It continued to be a dream until 13 years ago, when Biehl planned his vineyard. Then, 10 years ago Eveningside Vineyards opened to the public in Cambia, N.Y., near Niagara Falls.
"When we first opened, I was working for the government and opened the tasting room on weekends," Biehl says. "For the first five years I worked full time and ran this business. Now I just have one job."
It was five years ago that he needed to expand and add a building. That's when he needed alternative financing.
The vineyard produces about 1,500 cases of wine a year and has grown to 10 employees. The wine is sold through the tasting room, the Internet and the larger wine stores in the Buffalo area.
"I left the government, but not retired," he says. "When will I retire like a normal person? I don't think about that. I'm 54. I love what I do. I think it's a good gig if you're doing something that you love."
NoDa Brewing Co., Charlotte
Todd and Suzie Ford were ready for change. Suzie, 46, lost her job as a banker when her company was bought out in 2009. "Todd's airline job kept taking him away from home more and more," she says. "We were looking to get him home more, and to do something different."
Todd, 51, has been home brewing since 1995, and their friends and family kept pushing them to sell his brews. So the couple starting looking at the brewing industry.
"There were one or two breweries in Charlotte," Suzie says. The metro area has a population of 1.7 million. Craft brewing was a hot ticket. So, the site was right for it. The question was how did we go about funding it."
"Two things happened," she says. "We found a local banker who believed in us and gave us a small equipment loan." Then they heard about Guidant through a friend. "We were able to roll our 401(k)s into the business for capital to get started."
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The brewery started with just Suzie, as Todd continued his job as a pilot. But before the brewery actually opened, he quit his job and rolled his 401(k) into the business also.
"It was a significant jump," says Todd. "I had reached the pinnacle of my career in airlines. I had been in for 19 years. I had peaked out, waiting for someone in front of me to retire so I could improve my status."
The couple have four children, but waited until their youngest was a sophomore in college before embarking on the venture. Now their oldest son also works at the brewery. The couple live at the brewery, which makes things a lot easier.
The brewery produced 1,600 barrels in the first year, and 4,000 in the second year. That is expected to double this year, Todd says. They have 22 employees, most part time.
"We knew that it was a huge risk," says Todd. "We also knew there was a sacrifice. I had been working for a company. Bad business decisions put our company in a bad situation. We felt better having control of our destiny. Good or bad, we would be in control."
The Hardware Distillery, Hoodsport, Wash.
Jan and Chuck Morris decided to try her dream in a little town in Washington state where they already owned a cabin. They bought an old hardware store in the center of town, and after two years, finally got the permits necessary to open their distillery.
"It took a long time to get permitting," she says. "The federal and state were easy. This was a first in Mason County, and it took them a couple of years to see it wouldn't blow up the town."
The company has three stills. They produce their products in the winter, and sell them in the summer.
"This past Memorial Day we opened our doors and had one gin," she says. "We had a goal of how much we wanted to sell. We made three times the goal in the summer. By end of the summer we had three more."
The company makes two gins, one to go with crabs and another to go with oysters. But they also produce a variety of other products, using only local ingredients. They produce a vodka made from pears, and an aquavit. And they are working on a whiskey.
The specialty is Bees Knees, a distilled honey mead that starts as 80% honey and 20% fruit. They have plum and peach versions.
Chuck, 63, still works as a structural engineer, but is the distiller. Jan, 62, says they don't have employees yet, and they figure they will continue to work at their other jobs for another nine months.
They used their IRAs to fund the business.
"I know some people think it's weird to start a business at our age," she said. "I'm glad we had the opportunity to use retirement money to start a career that's fulfilling to both of us."