Hello Everyone, so I am contemplating a big move in my life, and by no means would I do it without first getting some advice from some of you more seasoned developers. So I’d like to thank you in for advance for any of your replies (and honesty).
So, like everybody else on this forum, I want to make a video game (big surprise there hah!). I have been working on my game for maybe a year now part time. Which when I say a year, I mean maybe 20 hours a week at best for a year. So progress has been somewhat slow. Although I am happy with what I have produced so far, there is still so much to do.
Well, I have been considering quitting my job and working on my game full time. In order to do that, I’ll need to cash in on my retirement fund which is my 401K. Typically with a 401K, you cannot get the money until you are 59 ½. Which straight up sucks to be honest. The only other way to get your hands on it is too quit your job, but then you get a .28% tax deduction, as well as 10% penalty on the funds. So that is almost half of your retirement fund you are kissing goodbye if you quit and cash in on it.
So, after the deductions, if I quit my job, it would cover my living expenses for about two years. In those two years of development I could get a lot of work done. Of course I’m banking on the fact that my game will be properly marketed in that time and ready for release. If for some reason the project turns into a failure, or it just takes longer than I thought, I can always get my job back, so I’m not too worried about not being to support myself but I would basically spend the majority of my retirement fund.
For those of you who actually have experience in shipping a game, what are some things I should seriously consider before making a move like this?
Edit: Do you think maybe it would be a good idea to first release a prototype of the game to the community for feedback, before I quit my job?
Dont do this with your first game. I say at least 5th or so before you can decide.
Ideally you should sell your first few games until you have such cash from sales, do not touch those retirement funds.
There is one more problem: getting assets, character artists, somebody to make interface, sound, some music, maybe traveling to some game conference. Unless you can make it all by yourself, you need some funds for developing game. Those all are not so small expenses, how you would cover that without job and eating up retirement?
Hmm, okay. Yea I have no experience in actually finishing a game so I don’t know what to fully expect down the road. It certainly would be a gamble. As far as asset creation, characters, interface and music, I’m doing all that myself :). Maybe I am being a little presumptuous that I can handle all of that? So far I have the main character modeled and mostly animated, as well as the protagonist. Aside from that, nothing else is done. I don’t even have them in a game engine yet.
The harsh reality of game development is that the majority of projects fail; cashing out on your retirement fund is a serious gamble that doesn’t really make sense. If you do want to go into development full time, you are much better off looking for investment or publisher backing.
Shipping a game is one thing, but running a successful business is also another one entirely.
Hey @ambershee, maybe it is a bad idea. Like I said I don’t have the experience or foresight to really know how it will turn out. I’ve always been a risk taker though. So, the alternative you mentioned, finding a publisher, how do you go about doing that?
Yeah, I think it would be better to go through the process of releasing a game at least once so that you get the experience and a better handle on what the process is like so that you can be more successful later on. Think of it this way: if you’re developing a skill–like Art–you’re not going to be very good when you first start off, you’re going to improve as you get more experience, so you would expect that the first game you release isn’t going to be that great. Sure, there’s a chance you could make it big, but since that’s really unlikely it would be better to wait and try and do it when you’re better situated for success.
I’m not trying to offer financial advice, but give a list of issues.
Be careful as 401k has heavy tax when pulled. I know this is something you may, or may not have looked at, but there are different tax rates on the amounts pulled.
If you were seriously going to do that i would consider trying to take a loan out against it. If possible. it’s not financial advice, but if you pull and get hit with a tax. It’s something you would need to calculate. If you budget your game at 2 years would the interest be higher than tax? I’ve known some game devs that 2nd mortgage because they risk of losing their home was a better option in bankruptcy than than the bank taking there 401k. Which most time is protected under bankruptcy.
Okay, thank you all for your advice! I did get some mixed ideas, but on the whole it seems like the consensus is that due to lack of experience I shouldn’t take that gamble.
@franktech I am 28 years old, I own a home and I am married and have a dog. So two dependents. I’m currently chiseling away at debt right now. I’ve almost got everything paid off (except for the house).
However, after taking a closer look, it seems 401K isn’t the best option for front loading my development costs. I mean I knew I would take a big hit, but it is worse than I thought. It wouldn’t even cover the 2 years of development.
It seems like focusing my efforts on a quality prototype and finding a publisher is the way to go.
So with that in mind I did have some questions:
With a publisher, are you basically selling your rights to your game to the publisher in return for a cash payout?
If that is the case, then when negotiating payment, shouldn’t you try and negotiate profit into the deal?
I mean, you don’t want to just cover expenses and break even in the end, there would be no point in that am I thinking correctly here?
That may be obvious, but I’m not really business savvy so I want to make sure I’m thinking correctly here.
Any deal you strike with a publisher would be entirely dependent on what you discuss with that publisher. Generally speaking, the ball is in your court and it’s up to you to begin that negotiation.
…but you’ll need some sort of business plan before you can do that.