From Leo Aquino, founder and monetary coach, at Queer & Trans Wealth
With the price of residing, medical health insurance and taxes all rising, saving for retirement as a freelancer can really feel unimaginable.
Partially, that’s as a result of as a freelancer or small enterprise proprietor, you’re wholly accountable for creating your individual retirement financial savings. Employees at massive corporations have some notable benefits on this space: many employers supply 401(okay) or 403(b) accounts to full-time staff. This lets staff mechanically contribute parts of each paycheck earlier than that cash hits their account. These contributions are sometimes tax-free, and a few match staff’ contributions as much as a specific amount, too. The ‘set it and neglect it’ parts of this course of make it a lot simpler for staff to spend money on their future retirements.
Partly due to these obstacles, a 2019 examine by the Pew Charitable Belief discovered that solely 13% of self-employed staff in single-person companies put cash of their retirement accounts, in comparison with 72% of staff in corporations that supply retirement plans. However freelancers want retirement financial savings, too.
The excellent news is the primary few steps are the toughest, and after these are out of the best way, freelancers can save for retirement in methods which can be much like company staff. In case you’re a freelancer and also you’re prepared to start saving for retirement in the present day, listed below are 5 suggestions that will help you get began:
Microinvesting
Apps like Acorns and Qapital provide help to make investments small quantities of cash out of your account right into a Roth IRA (particular person retirement account).Image your self again within the day, paying for a $4.25 espresso with $5 in money as an alternative of your cellphone or a card. The barista provides you 75 cents in change. While you bought residence, you’d drop your cash in a piggy financial institution that you simply used to steadily save up your change.
Microinvesting apps apply the identical logic to digital funds. The automation makes retirement investing simpler, much like having cash deducted out of your company paycheck — plus, it’s satisfying to look at the small deposits pile up over time.One caveat: Acorns and Qapital will add up the small deposits and deduct them out of your account as soon as per week. As a monetary coach who serves queer and trans folks throughout the U.S., I’ve seen that many individuals who stay paycheck to paycheck are prone to overdrawing their accounts if Acorns takes an surprising quantity underneath $15 mechanically. In case you select this technique, ensure you have a stable buffer in your checking account to forestall overdraft charges. Examine if the app is linked to a financial institution that’s FDIC-insured, in order that your deposits as much as $250,000 are protected in case the app goes out of enterprise. Most main banks are FDIC-insured.
In case you’re self-employed or run a small enterprise, you’ll be able to open your individual particular person retirement account (IRA), which is a tax-advantaged account—that means most contributions and funding positive aspects are tax-deductible. Some states have auto-IRAs that permit staff who don’t have entry to 401(okay) by their employer to open state-sponsored retirement accounts.
As of October 2025,12 state-sponsored IRAs embrace freelancers and solopreneurs:
Most of those states let you arrange automated transfers out of your checking account to your retirement account. As an added plus, you received’t have to roll over your advantages into a special IRA for those who change jobs or gigs.
Open an IRA or a 401(okay) utilizing a brokerage account
A brokerage account permits folks to spend money on shares, bonds, mutual funds, exchange-traded funds (ETFs), and different funding automobiles. Some brokerages additionally let you open various kinds of IRAs:
- A standard IRA permits you to contribute and make investments pre-tax {dollars},. A standard IRA can also be tax-advantaged, which implies contributing to a conventional IRA now might decrease your taxable revenue. Nevertheless, you’ll should pay taxes while you make withdrawals in retirement, and any withdrawals you make if you’re youthful than 59 ½ are topic to an extra 10% federal tax. You additionally should take out specified quantities (known as required minimal distributions, or RMDs) beginning at age 72 even if you’re nonetheless working.
- A Roth IRA permits you to contribute and make investments post-tax {dollars}, however you received’t should pay taxes while you withdraw cash in retirement. Not like a conventional IRA, investing in a Roth IRA received’t decrease your taxable revenue. Moreover, there are not any RMDs with Roth IRAs.
- A rollover IRA is the place folks sometimes roll over their 401(okay) balances from earlier employers
- A SEP IRA permits you (as a sole proprietor or your individual employer) to contribute as much as 25% of your wage into your retirement account.
- A SIMPLE IRA is for employers with as much as 100 staff — together with freelancers and solo enterprise house owners. Not like a SEP IRA, a SIMPLE IRA permits you (as your individual employer) to match your individual retirement contributions.
You possibly can open your individual IRA anytime by brokerage companies together with:
- Charles Schwab
- Constancy
- Vanguard
- Wealthfront
Freelancers and solopreneurs may open their very own 401(okay)s:
- A solo 401(okay) permits you to contribute as much as $70,000 yearly (as much as $77,500 for those who’re over the age of fifty) with tax benefits as a freelancer or solo enterprise proprietor.
- Much like a SIMPLE IRA, a SIMPLE 401(okay) is for employers with as much as 100 staff — together with freelancers and solo enterprise house owners.
Discuss to your accountant to seek out out which plan is finest for you. Your accountant may provide help to submit the best kinds to the IRS while you’re able to open an account.
Match your individual 401(okay) and IRA contributions
As we’ve talked about, while you work for an organization that provides a 401(okay) match, the corporate might double your retirement contribution as much as a sure share. For instance, in case your wage is $100,000 per 12 months and also you contribute 3%, you’ll deposit $3,000 in your retirement account over the course of the 12 months. If your organization matches your contribution, they’ll deposit an additional $3,000.
Freelancers can’t do that as simply, since we work for ourselves. However as a sole proprietor or single-owner LLC, you’ll be able to arrange your retirement accounts so that you simply, as your individual employer, arrange an organization match for your self as an worker.
Sometimes, freelancers take this step after paying off private and enterprise money owed, build up ample financial savings for emergencies, and paying different contractors who assist their enterprise. It takes time to get up to now. Don’t rush your self into utilizing this selection proper now for those who aren’t in a position to afford it. However take into account it as a objective you’ll be able to obtain down the road, and know that you could have an organization match your retirement contributions as a freelancer.
Use the IRS contribution limits as a goalposts
There are a number of retirement calculators that provide help to perceive how a lot you’ll want to make investments yearly to retire comfortably. Spoiler alert: It’s a excessive quantity, particularly for those who’re solely getting began to spend money on retirement in your 40’s and 50’s.
In my monetary teaching follow, I see how overwhelming that large quantity might be for folks. As a substitute of specializing in that, I counsel that folk use the IRS contribution limits as goalposts. For instance, the Roth IRA contribution restrict for 2026 is $7,500 per 12 months for folks underneath the age of fifty. That’s a contribution of $625 monthly.
If it looks like an excessive amount of, strive committing to 25% or 50% of the contribution restrict. For instance, 50% of the Roth IRA contribution restrict for 2026 is $312.50 monthly. You possibly can even cut up this up into twice-a-month deposits of $156.25.
In terms of saving and investing, forming the behavior is extra essential than depositing a big quantity upfront. Begin small, attempt to go greater, and watch your contributions develop. Earlier than lengthy, you’ll look again and be glad you took these first steps.
