Professional Freelancers Need to Plan Ahead for Retirement

There’s an old saying among professional freelancers. Sometimes you’re so busy working, you forget to make money. While the life of the professional freelancer certainly has it perks, the major one, of course, being “free” to work when and how much you want from wherever you want, usually doesn’t come with all the financial retirement perks of a full-time worker.

It doesn’t matter if you’re a freelance artist, or mystery writer, or journalist, or blogger, you are not going to be offered a 401(K) retirement plan by any company and/or organization you work for. You’re also not going to offer a pension. What you will receive instead is a 1099 tax form at the end of the fiscal year. It’s up to you to create your own savings and retirement plan.

Sadly, many freelancers reach retirement age and find they don’t have enough money to live on. But if you’re the kind of freelancer who has decided to stay put in a family home that you’ve been paying on for years, you just might be in luck. You can apply for a reverse mortgage which can tap into all that equity you’ve accumulated.

Says a representative at All Reverse Mortgage, if approved for a reverse mortgage loan, you can take your proceeds in one lump sum payment or in monthly disbursements. You don’t need to pay the loan back until you leave the home or you die.

But reverse mortgages aside, what are some other crucial steps a professional freelancer must take to make sure you have enough cash to live on in your golden years? According to a new report, prioritizing retirement funding should be a major part of every freelancer’s life and business plan. But all too often, it’s not.

In fact, in exchange for that “free lifestyle,” freelancers in general struggle to pull in enough to pay the bills and save something for a rainy day. Freelancers are forced to fund everything out-of-pocket and this can be an incredibly overwhelming task that can cause some to simply give up and take on a traditional, “soul sucking nine-to-five job” inside a four-by-four cubicle.

However, what if there were some ways you could relieve some of that financial pressure and begin a path of not only funding retirement, but an early retirement?

Say the experts, using a bit of creativity and a focus on disciplined financial habits, you can develop both a thriving freelance business and an excellent, well-funded retirement.

Here’s how.

Exploring All Your Funding Options

Again, freelancing can be a difficult business model because most of you will need to use your own money to keep the business afloat. That’s why it comes as a relief when you can get additional funding from other sources that will help you grow your small business. You can also use that additional funding to help out with basic living expenses.

For instance, if it’s possible to attain a traditional small business loan from a bank, you should do it (not an easy task, however). You should work directly with your banker on loan terms that work for you including a reasonable interest rate.

Once you receive your loan funds, you must use them wisely. Maybe you should create a plan that focuses on how to use the loan funds, whether you plan on scaling your marketing or hiring an employee to scale your production.

If you can’t get a traditional loan, entertain personal loans or lines of credit. You can also try crowdfunding and grants that are designed for freelancers (especially writers and visual artists).

Open an IRA

Begin your retirement savings with simple monthly contributions to an individual retirement account (IRA). Which type of IRA you choose depends on the following:

–Your saving goals

–If you wish to withdraw money early

–How much cash you generate monthly (this often varies)

–How much diversity your want in your portfolio

–Your choice of setting up a Traditional IRA, Solo 401(k) plan, or Roth IRA

Develop Good Saving Habits

An other way to say this is, make sure you pay yourself first. When you get paid, you need to use the funds responsibly. Financial experts stress that you need to be diligent when it comes to retirement savings once your accounts are set up. Sticking to a budget and getting into the savings habit helps tremendously.

Draft a budget for your freelance business that is realistic and works for you. Keep track of all your income and then add up variable and fixed expenses. Make sure you account for your salary (that is, you actually pay yourself one).

Pay serious attention to what’s left over after all expenses are paid, including your salary. Then allocate those left over moneys to savings accounts and assets like stocks and digital assets such as Bitcoin.

Live Simply

If you’re a freelancer, money doesn’t come in as regularly as it would with a traditional nine-to-five job. That means the simpler you live, the better. This could mean choosing to live in a smaller home or even an apartment where repair expenses become the responsibility of the building owner.

Drive one vehicle and make sure to pay it off as soon as possible. Don’t belong to expensive clubs. If you marry and have kids, take full advantage of a public school education. You should also make sure to have good, affordable health and dental insurance.