Skip to content

10 Retirement Planning Tips All Freelancers Should Know

calculator-calculation-insurance-finance
Running your own business or doing freelance jobs can be great, as it offers you flexibility, control and freedom, but there is one aspect that is often overlooked by most freelancers and business owners: retirement planning. Without a full-time employer to take care of retirement plans, it is up to the freelancers and business owners to plan and save for their retirement – and the best time to start was yesterday.

If you haven’t started with your retirement plan yet, or you already did but are looking for more strategies, here are ten tips for getting retirement savings prepared.

1. Create a Budget

Start by creating a budget. As Dave Ramsey said, “a budget is telling your money where to go instead of wondering where it went.” This entails writing down your current income and deducting from it your regular bills and expenses. If you’re in debt, debt repayment should also form part of your budget items. Important items in your budget should consider housing costs, healthcare costs, daily living expenses, and insurance.

2. Begin Saving Right Now

It’s so important to begin your retirement savings plan now. It’s honestly never too early to begin. Regardless of whether one has a regular paycheck or, like most freelancers and those who are self-employed, irregular paychecks month to month, some money needs to be put into savings immediately.

3. Look into Retirement Savings

There are tax-advantaged retirement saving programs that you can look into. Just because you’re self-employed doesn’t mean you don’t get access to some of these. Research on Roth IRAS, Traditional IRAS, and 401k; you can even look into gold in your IRA. These are just some of the common programs and retirement saving methods available but they only scratch the surface of what’s offered out there.

4. Try to Put 20% of Your Monthly Paycheck into Savings

While freelancers often have irregular paychecks with little consistency, it’s still very important to put 20% into savings. If possible, try to automate your savings. This automatic transfer will split your money into a checking and savings/retirement account.

5. Be Prepared When Disaster Hits

Disasters may hit and they sadly can’t be avoided. So it’s important to protect yourself from these financial shocks. Having a separate emergency fund or even special insurance coverage can help prevent you from taking money out of your retirement savings.

6. Social Security is Around

It’s best to know that social security is around, and these retirement programs are designed to help people save for retirement, that includes freelancers and self-employed people too.

7. Ask Yourself if Any Circumstances could Make You Retire Early

While this should be done right when you’re planning your budget, it’s best to relook over this. When strategizing your retirement, think about what sort of needs you may need. If you have health-related issues, this could heavily affect you with age. If there’s an off chance of needing to retire sooner due to health (whether it be physical or mental), there should be a written strategy for this too.

woman-man-financial-advisor

8. Seek Professional Help

Know that it’s fine to seek out help. If you decide to seek out a professional to look over your finances and exit strategy, be sure to ask questions so you have the best understanding. Financial advisors can help coordinate assets and tax planning too. However, make sure to find someone who has a heart of a teacher, someone who will equip you with knowledge and understanding on how to deal your finances and make better decision – not decide for you.

9. Take Your Time to Figure This Out

You should know that it’s fine to take small steps to figure these all out. This is one of the biggest financial-related tips for any self-employed person. While it’s best to begin taking care of your retirement plans now rather than later, you need to pause a bit if it becomes overwhelming. Just begin by strategizing a plan on how you would like to begin saving for retirement, a sort of pre-plan to your big plan.

10. Be Cautious With Your Health

Health complications are one of the problems that can cause people to go into early retirement involuntarily. While not all complications can be avoided, be sure to take care of yourself. Think of your lifestyle habits and how they have a lasting effect on you. Looking into appropriate health coverage for you should also be a priority.