One of the best parts of gig work or other self-employed work is being your own boss. Not only do you get to set your own schedule, but you also get to set your own rules for how and when your work gets done. However, being your own boss means you have to take care of all the administrative work as well. Where an employer would normally provide a retirement account option for you — and maybe even contribute a match — when you’re self-employed, you have to take care of that all on your own.
But this doesn’t necessarily mean it’s impossible to save for retirement, or even difficult. However, there are tips you’ll want to know if you plan to take this route. Here, nine financial experts from Kiplinger Advisor Collective each share one important thing self-employed small-business owners and gig economy workers should know about saving and planning for retirement.
Diversify your savings
“It's important to diversify your savings. While you should max out a SEP (Simplified Employee Pension) every year that you are able, you should also save money in a high-yield savings account so you have access to some funds in case you hit a rough patch. I recommend an online bank, like Bread Financial, which has a low minimum of $100 and a generous annual percentage yield of 5.15%.” — Trae Bodge, Trae Bodge Media, LLC
Make your business work for you
“It’s crucial to set your business up so you never need to worry about retirement. This means finding ways to make your business work for you so you can prioritize ensuring a secure financial future. I believe a passive income is the best possible financial goal people can achieve because it ensures not only a secure retirement but also an earlier one where time spent with loved ones is the focus.” — Justin Donald, Lifestyle Investor
Explore alternative retirement savings options
“Unlike traditional employees, self-employed small-business owners and gig economy workers don't have access to employer-sponsored retirement plans like 401(k)s. To secure their financial future, they must take charge of their retirement planning. This means exploring alternative retirement savings options, such as SEP-IRAs, Solo 401(k)s or individual retirement accounts (IRAs).” — Amrita Choudhary, Wasabi Technologies
Save for the what-if situations
“The fact that you are productively earning now may not last forever. Some things you take for granted now, like your health and mobility, may not be there at a certain point in the future. So, you need to save for the day when that happens. If you do not, no one will necessarily throw you a lifesaver, as people are often busy with their own problems.” — Zain Jaffer, Zain Ventures
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Consider pre-tax and post-tax contributions
“Self-employed small-business owners and gig economy workers often lack awareness regarding the various options available for them to save money in taxes and build retirement savings. Retirement plans are not only good for the employer — they also help with employee retention. A retirement plan that allows for both pre-tax and post-tax contributions helps with proactive tax planning.” — Marguerita Cheng, Blue Ocean Global Wealth
Choose a retirement plan tailored to you
“One important thing to do is to set up and contribute to a retirement plan tailored to you. It can be a SEP-IRA, a Solo 401(k) or a traditional 401(k). You need to get something in place as soon as you can. This will help you as it gets you saving earlier rather than later. It may also allow you to put in more than you normally would if you were a traditional W-2 employee.” — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management
Ensure you have an emergency fund
“Self-employed small-business owners and gig economy workers should prioritize creating an emergency fund alongside their retirement savings. Unlike traditional employees, they lack employer-provided safety nets like paid sick leave or unemployment benefits. This financial buffer provides stability and peace of mind, allowing for more consistent and confident long-term planning.” — Manoj Kumar Vandanapu
Take advantage of a low tax bracket
“Workers must remember that the employer sets up the retirement accounts for their employees. When you are self-employed, you are your employer, so it is up to you to set up a retirement plan for yourself. While your income is growing, take advantage of being in the lowest tax bracket you will probably ever see and set up your retirement account as either a Roth account or an after-tax account you convert to a Roth account.” — Deborah W. Ellis, Ellis Wealth Planning
Focus on proactive tax planning
“Self-employed small-business owners and gig workers need to focus on proactive tax planning to maintain steady cash flow. Unlike W-2 employees with regular withholdings and 401(k) contributions, they deal with irregular quarterly tax payments and retirement contributions. Effective tax planning helps smooth out these fluctuations, making it easier to save and invest consistently for retirement.” — Dennis McNamara, wHealth Advisors
