How to Save for Retirement When You’re a Freelancer

After all, you work hard for your money.


There are many pros to being a freelance writer or designer — the flexibility of the hours, the ability to be selective about clients, the feeling of independence, to name a few. But one downside is, gulp, being responsible for your own money management — including saving for that ever-important nest egg. Don’t let the fact that you don’t have access to a company-sponsored 401(k) hinder your retirement goals.

There’s no rule of thumb for freelancers because each person’s financial situation is different. To be safe and build savings comparable to what they might receive at a large company, freelancers should take a close look at their annual income and current savings.

For example, consider Josh, a 34-year-old freelancer living in New York City who already has $15,000 in retirement savings. He is now earning $68,000 as a writer and saving $8,000 per year for retirement. With that savings rate, he can expect to have $43,000 per year in spending money in retirement after age 68. If he saves $12,000 per year, his retirement spending increases to $54,000 per year. Whatever amount he decides to save, he can use a SEP-IRA, or a combination of a SEP-IRA and Roth IRA.

For more, including a breakdown of the different IRAs at your disposal, read How Freelancers Can Save for Retirement and Unexpected Expenses.

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