4 Strategies for Freelancer Retirement
What will you be doing twenty, thirty, or even forty years from now? Do you know?
Most freelancers hate to think about retirement, and for most of us it’s years away.
But the sooner that you start planning for your retirement, the better off you will be in the long run. In fact, now is the best time to start making retirement plans.
Many traditional employers offer 401(k)s and/or pension plans to their employees, but of course, freelancers don’t automatically get these sorts of benefits. As a result, freelancers often neglect their retirement needs.
Yet, retirement is something that every freelancer should plan for.
In this post, I’ll outline four retirement strategies that freelancers should consider. Please note, that I’m not a financial advisor. This post contains general information only. For information pertaining to your specific situation, please consult a financial professional.
Strategy 1: Part-Time Freelance Work
If you’ve thought about retirement at all, this is probably the retirement planning approach that you’ve considered. Many freelancers plan to keep on working right through their retirement years.
Freelancing is ideal for part-time work because you can set your own work hours and you can work as little or as much as you want. It’s understandable that many freelancers would want to continue working into their golden years, especially if they really enjoy what they do.
The drawback of planning to work part-time during your retirement is that not all freelancers will be able to work past retirement age. For some, health may be an issue. And of course, no one knows what the economy will be like that far into the future.
So, while working through retirement will be doable option for some freelancers, it may not work as a retirement strategy for all.
Strategy 2: Developing a Passive Income Stream
A second retirement strategy that freelancers often think about is developing a passive income stream that will sustain them through their retirement years.The thought is that you do the work now and continue to be paid for it.
Of course, passive income has worked well for some freelancers–especially those who have developed their own product such as a book, WordPress theme, or software program. Others will attempt to generate a passive income through affiliate marketing. Here is a Freelance Folder post that explains more about income-generating projects, Why Every Freelancer Should Have a Personal Project.
In theory, as long as your products continue to sell well you should continue to have some income.
The biggest drawback here is that your income may be unpredictable. Sales may be up one month and down the next. Yet, as a retiree you will probably want an income that you can count on.
Plus, you will most likely need to continue marketing the products during your retirement–so the income may not be totally passive.
Strategy 3: IRAs, Solo 401(k)s, and Other Vehicles
A third, more traditional strategy is to purchase traditional retirement investment vehicles such as IRAs and Solo 401(k)s. If you choose this strategy, you will most likely need the services of a financial advisor.
However, with the right kind of planning, this strategy may provide you with the most financial security during your retirement. Plus, if your funds do well, you will be able to collect income even if you become too sick or too disabled to work
Depending on your personal situation, there may also be tax advantages to employing this strategy.
Strategy 4: Combination Strategy
In this strategy, the freelancer hedges his or her bets by setting things in motion so that they can use all of the strategies above.
He or she will build a strong freelancing brand so that they can continue to work if they wish to. They will also develop some income generating projects. Finally, they’ll use some traditional retirement savings accounts in case they can’t work.
In many ways, this may be the smartest and most flexible retirement strategy of all. It certainly provides the freelancer with the most options. Remember, your retirement strategies do not need to be mutually exclusive.
No matter what their current age, freelancers can’t afford to ignore retirement planning. You can’t afford to ignore it.
Do you have a strategy for your retirement? Have I missed any retirement planning strategies?
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