Those retirees who had been hit by the stock market crash and lost virtually all their retirement funds or pensions have showed up again in the workforce. Now that they are working out of necessity, they are finding it tougher to compete because of their age. Everyone knows that employers prefer younger blood and these already trained applicants are often left out in the cold.
They are having a tough time in the entrepreneurial field as well. It takes money to make money and their age also makes it tougher for them to avail of a start-up loan for a new business. The usual sources of funding, home equity and banks, are getting tougher to pull cash out of.
Banks have become stricter, following the recessions and ensuing bailouts. That means less small businesses can qualify for loans. The continuing plummet of the real estate market means that most people have less equity than they thought they had. Most people are stuck with homes that are losing value by the day, giving them less equity to take a loan out on.
Fortunately, enterprising retirees have found a loophole that guarantees them money – they cash out their 401k or their IRA funds. The best part about this loophole? It's tax-free and they don't have to pay that 10% early withdrawal penalty.
Funnily enough, this loophole is known as ROBS, or Rollovers as Business Startups. Technically, all the retiree is doing is withdrawing their forced savings to serve as seed money for a budding business. How does it work?
Once a corporation is made, a retirement fund is created for the new employees. That allows the 401k funds to be withdrawn and “rolled over” into the fund, which the participants can put their money in. The corporation then can exchange capital stocks for funds, and the proceeds of the stocks are withdrawn.
While it's not for everyone, the economy dictates creative use of funds and this seems to be a very good one.