Saving for Retirement as a Freelance Writer

As a freelance writer, you get to be your own boss. You’re free of the hassles of demanding bosses, bossy co-workers, commutes, and office politics. You can work from home, set your own schedule, and decide what kind of work you want to do. Of course, that also means you get to miss out on some of the benefits of working as an employee. You might not be concerned about living without the free coffee in the office, but facing the prospect of saving for retirement on your own can be a little more daunting. After all, you don’t have an employer to match your contributions to your retirement savings account, and there isn’t any formal structure for paying into a retirement account unless you set one up. Although planning for retirement as a freelance writer takes a little extra work, it can be done. These tips will help you build your career today without taking your eye off your goals for tomorrow.

Find Financial Advice

As a freelancer, having an accountant to help you with the financial aspect of managing your career just makes sense. An accountant can help you with things that affect your freelance writing income in the short term, like taxes. They can also help you make smart financial decisions that will allow you to prepare for bigger things, like buying a home and saving for retirement. As a freelance writer, you have multiple retirement savings account options to consider. An accountant can make sure you select the best one for your needs. Not quite ready to commit to having an accountant? You might check out some of the free resources available, such as the financial advice available through the Freelancer’s Union.

Understand Your Account Options

Traditional and Roth IRAs are both useful retirement account types for freelancers. However, you may find that their maximum savings allowances are too low for your needs. If you want the ability to save more, there are other accounts that could be a better fit. For example, a Solo 401(k), which allows you to contribute a baseline amount plus 25% of your self-employment income as an “employer” contribution. A SEP-IRA gives you the ability to contribute a portion of your self-employment income with a high maximum balance. Finally, a Simple IRA is a good option for writers who are just starting out, as it has a much lower maximum contribution rate.

Make Retirement Account Contributions Part of Your Rates

When you set rates for projects, it is important to consider not only what you want to be paid for the work you do but also how much you need from each client to cover the costs of running your business. Legitimate business expenses include things like health insurance premiums, taxes, and retirement account contributions. After you figure out the base rate that you would like to be paid for the work you are doing, add a percentage on top for the cost of doing business. These are the costs that you shoulder for employing yourself, and the people who hire you should pay them.

You don’t have to present the rate to your clients with the different costs broken down. Instead, when you set rates or devise a budget for a project, give clients a price that includes these expenses. If you don’t include these costs in your rates, your business will not be sustainable.

Consider End-of-Year Contributions

During the holidays, decide if you have any extra money that you can use for your retirement plan. Year-end contributions are attractive to freelancers for many reasons, not least of which is that they can lower your taxes. Making a final retirement contribution at the end of the year may reduce the amount of taxes you owe. This is always helpful for freelancers who are juggling self-employment tax burdens.

Set Retirement Savings Goals and Monitor Your Progress

It’s easy to set up a savings account and let it run on autopilot without evaluating your progress. Make sure you’re moving towards retirement security by determining an amount you would like to save and then setting small benchmark goals along the way. An accountant can be helpful in assisting you as you set realistic goals and create a plan to reach them. However, you can also start by deciding how much you want to have saved for retirement at various age milestones.

Setting these milestones will not only help you stay on track towards your overall goal of a set amount of money for retirement, but will also give you defined points at which you sit back and evaluate your progress and decide if you need to make any changes. It’s good to monitor your progress in this way as a freelancer. After all, you may find that you need to increase your rates, add clients, or consider working in a different writing niche in which the pay rates are higher.

Building a career as a freelance writer is exciting, and with the right planning, you can get ready for retirement as a freelance writer. However, it’s important to use every tool available to you. That includes the support you will find on Writers Work. With a membership on our site, you get access to an online profile and portfolio that you can use to attract clients who value your work and are prepared to compensate you fairly for it. Take a step outside of the content mills and start building a profitable writing career with our document editor, job finder, and submissions databases, as well as our exclusive Writers Marketplace that puts your work in front of potential clients. Membership in our site gives you access to all of these benefits and more, for a low, one-time fee. Want to learn more? Join today to start reaping the benefits of membership.