- 6 min read

Top Retirement Savings Options For Freelancers

img of Top Retirement Savings Options For Freelancers

Freelancers are an increasingly large part of the workforce. It is anticipated that freelancers will become a major workforce by 2027 in the US. As much as 50.9% of the population will work independently. With this growth comes a greater need to save for retirement as a freelancer. But there must be options that work best for people who have unpredictable incomes, and sporadic incomes like freelancers do.

This blog post will list the best retirement plan options for freelancers available, including IRAs, Roth IRAs, self-directed solo 401(k)s, and SEP-IRAs.

Retirement Saving as a Freelancer

Freelancing seems like a great way to control your time and work on projects you enjoy. Freelancers get the opportunity for better pay without having much risk involved, as often there’s no boss looking out over their shoulders telling them what needs to be done next.

However, more work goes into setting up an independent lifestyle than working with other people. Freelancing can be tough even in the best of times, and with recent financial uncertainty, it has never been more important to set goals for yourself. Additionally, without retirement savings plans, you may find your career is short-lived or even worse. You don’t know what type of account options are out there.

The benefits of being self-employed are many, but they come with some drawbacks. For example, you have to manage your own health care costs and saving for retirement as a freelancer because you don’t get any matching contributions from their employers as traditional staff do.

The good news?

Some retirement plans are an excellent option to invest and reduce taxes if you are a freelancer. Further along, we will discuss how these different accounts can help you better prepare for retirement with less worry about your finances later in life.

Best Retirement Plan Options for Freelancers

A self-employed person’s retirement savings can be easier than ever with one of the various types of IRAs. There are few requirements for these account types, and you don’t need employees in order to open these accounts. The best part is that if this plan is set up correctly, then contributions will never miss a paycheck, making sure you make the most of your earnings as a freelancer.

There are several different types when it comes to IRA’s, but the best one for your situation will depend on what stage in life you’re at and your specific situation.


For those self-employed people who are just starting out, a traditional IRA is likely the best option. The best thing about opening an IRA is that it can help you save for retirement with tax-deductible contributions, however you are limited to a maximum amount of savings each year. Once you are 59.5 or older you can take out your saved money whenever you want, but those withdrawals will be taxed just like your ordinary income is.

You can start saving for retirement as a freelancer by opening a traditional IRA. You do not have to worry about taxes, Social Security payments, or contributions because it’s all taken care of with this account. The only thing that is left up in the air is how much funds you want to set aside each year, depending on your situation (size) and investment preference.

Roth IRAs

Roth IRA’s are an excellent way to save for retirement with limited income eligibility. The Roth IRA is a great retirement savings option for self-employed people because it offers tax-free growth of contributions and withdrawals in retirement.

Investing Digest: Know what’s moving the financial markets and what smart money is buying with Forbes Investing Digest.

You can withdraw your money from the account at any time without penalty or taxes being charged on it when you’re retired. It means that this offers an excellent benefit to those who may have been previously taxed while working and frees up funds they would otherwise use towards paying off debt with interest rates as high these days than ever before.

One of the significant benefits of investing in an IRA is contributing up to $6,000 per year. Plus there’s a special bonus for those who are 50 years old or older. The maximum contribution limit increases by $1,000 after reaching this age group.


Another best retirement plan for freelancers is a SEP IRA. This type of plan could be great if you’re a “solo-prenuer” who wants to keep things simple, as it allows individuals like yourself with no employees or businesses on their own payrolls to open up one at virtually any custodian in just about ten minutes assuming you have the right paperwork.

The money in a SEP IRA is taxed when you withdraw it, just like traditional IRAs. There are no catch-up contributions, but that’s less of a problem because this account type has higher limit because there isn’t any pre-set minimum requirement for getting started. You can contribute as little or nothing during periods where things aren’t going so well and then increase your yearly allocations once life gets easier again.

The SEP has two limitation components. The first is a maximum contribution limit, which changes with inflation each year. Alternatively, there is a limit of up to 25% of your compensation or net self-employment earnings (up from 20%). Your personal limit will be the lower of these two options.

Additionally, it is important to note that there is no catch-up contribution for those aged 50+; but a simple work around is the ability to open an additional IRA if your earnings do not disqualify you from taking advantage of these deductions.

Solo 401(k)

The solo 401(k) is a great option for freelancers or small business owners who want to contribute more than they would be able to with other account types such as the SEP IRA. You can make tax-deductible contributions as both an employee or employer, which means you could potentially increase your 2023 contribution limit up to $66,000 depending on income and how you structure your contributions.

A self-employed 401(k) offers the same benefits as a standard company-sponsored plan but without the heavy IRS filing requirements and administrative costs. Participants can contribute pre-tax earnings and invest in tax-deferred vehicles.

A self-employed individual may contribute to their plan in two ways. They can make salary deferral contributions equal to the lesser of $23,500 OR 100% of compensation. Additionally, if you’re at least 50 years old, your savings options are also higher because now there’s an extra $7,000 savings capital added on catch up each year.

In order to reach the total limit of $66,000 in 2023 investors may have their business make an additional profit sharing contribution from the company’s remaining profit. If this is something of interest to you be sure to work with a professional team to help you meet all of the IRS requirements, as the reporting and administrative requirements increase when taking advantage of this strategy.

Bottom line

Picking a plan with the intention of saving for retirement as a freelancer is a personal decision. It takes time and research to find the best option, but the above are some of the top options for those looking to save money on taxes while saving for their future.

Source: Forbes

Related Posts

There are no related posts yet. 😢