Tips for Saving for Retirement for Freelancers

Freelancers are self-employed and as such cannot depend upon employer contributions to save for retirement. Freelancers, like all self-employed persons, must finance their own retirement savings. Freelancers who do not save for retirement will find themselves in the position of either being unable to afford to stop working or having to rely almost entirely upon social security. Here are some tips to help freelancers save for retirement. 

Start saving early. 

The earlier that a person begins to save for retirement, the greater the funds that person will accumulate for retirement. Start saving for retirement during your 20s or 30s. Starting early will give you the best opportunity for a financially secure retirement. 

It’s never too late to start saving. 

Even if a freelancer did not start saving for retirement during their 20s or 30s, that does not mean that it is too late to start saving. If a freelancer has not been saving for retirement, the best time to start saving is today. An older freelancer may never accumulate as much as her younger counterpart, but the sooner that she starts saving, the more she will have. Additionally, a freelancer age 50 or over may be able to take advantage of “catch up” contributions which allow larger contributions than those made by younger workers.  

Take full advantage of tax advantaged savings plans. 

As self-employed individuals, freelancers have access to a number of tax advantaged savings plans, which may allow the freelancer to save a larger percentage of her income for retirement than an employed person. A freelancer may be able to contribute up to $5,000 per year ($6,000 if age 50 or over) to a traditional IRA or a Roth IRA. Additionally, a freelancer may take advantage of the retirement savings plans available to the self-employed such as a SEP IRA, which may permit the freelancer to make larger contributions. 


A simplified employee pension (SEP) is a retirement plan that allows the self-employed to make retirement contributions to a SEP-IRA on behalf of themselves and their employees. A SEP makes use of special type of traditional IRA called a SEP-IRA. A SEP plan must be in writing, however, a SEP plan is not required to meet the complex requirements for a qualified retirement plan (such as a 401k plan). 

If a self-employed person elects to set up a SEP, the self-employed person must create a SEP-IRA for himself and for each eligible employee of the self-employed person. An eligible employee is any employee who is age 21 or older, has worked for the self-employed person 3 out the last 5 years, and earned at least $550 in compensation from the self-employed person. Most freelancers would not have any eligible employees. 

A self-employed person may contribute up to the lesser of (i) 25 percent of total compensation from self-employment or (ii) $49,000 to his SEP-IRA. If the self-employed person has eligible employees, then the employer must contribute the same percentage of income to the employee’s SEP-IRA as the employer did to his own SEP-IRA. 

A freelancer looking to save for retirement should start saving as early as possible. Additionally, the freelancer should take advantage of tax deferred savings options such as the traditional IRA, Roth IRA, or SEP-IRA by contributing the maximum amount possible. A freelancer following these simple tips, will be well on the way to saving for a financially secure retirement.