Top Tips To Save For Retirement As A Freelancer

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Overall, about 40% of self-employed individuals worry that they will not manage to retire comfortably due to financial constraints, as reported by BBC. Being a freelancer, saving enough for retirement can be challenging because income varies each month. Nevertheless, you can still save enough after setting a realistic retirement age and saving accordingly. It is all about proper planning and calculating how much you have to set aside each month to hit your target.

Cut on your expenses and catch up on savings

Generally, you need to save at least 10% of your monthly income in your 30s, 12% in your 40s and over 45% if you are over 50 and still working, as advised by Freelancer Union. Fresh freelancers find it illogical to put away cash they cannot access in case of an emergency, especially when struggling with debts. To go beyond this, consider splitting every payment you receive into different accounts meant for individual purposes, including one for retirement. If you are already approaching your senior years and have not been saving, it's never too late to start. Forget the past, and focus on saving from this moment, as Kathy Colby, president of Financial Independent Inc. advises. She also recommends hiring a reputable financial adviser, who will help you handle many financial issues, including how to cut down on your expenditure and capitalize on saving.

Take advantage of retirement vehicles

Saving and investing to achieve financial freedom can be challenging, but you can never go wrong with setting money aside consistently. Successful saving often starts with formulating a reasonable strategy for managing your income. For instance, you may need to create accounts that deduct monthly savings automatically while making more substantial annual contributions to augment your efforts. Though you do not enjoy employee plans that are facilitated by employers, there are saving vehicles available for freelancers as offered by governments and financial firms across the world. A good example is the solo 401(k) pension plan. Such policies will often give room for flexibility and allow you to save on a larger scale.

Maximize your income and find multiple money sources

Maximizing your profits and establishing various income streams earns you extra money, allowing you to save more. To achieve this, you can aim to give services that suit both medium-size and high-end clients. You should also tailor your services to appeal to diverse demographics and locations. Also, offer online presence besides physical services to reach customers who have less financial ability. Additionally, you can make passive income from means that are unrelated to your field. For example, if you are living in a relatively big house, consider renting out the extra rooms, such as the basement, and using the money to clear debts, including mortgages. As always, make it a habit to save a considerable percentage of whatever amount you earn.

With the right earning and saving strategies, freelancers may actually have an advantage over their employed counterparts, as Refinery 29 suggests. All you need to do is leverage your strengths, clear your debts, and save towards retirement. Don't forget to hire a reputable financial adviser who will help you make better financial decisions altogether.

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Wednesday, 24 July 2019

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