Concert workers, like everyone else, deserve a pension. Freelancers, contract workers, the self-employed, temporary workers, on-call workers and people with secondary hardship are an important component of our economy.
Currently, an estimated 57 million Americans are concert workers. Since March of last year, the indie and concert markets like Gigspot and Upwork have seen growth in user numbers. The self-employed could account for half of employment in the United States by 2023. Statista released data from a 2018 survey in January showing that 27% of full-time workers had no retirement savings.
About 57 million Americans do work. Independent to independent. We should all be able to retire well. How? ‘Or’ What? People ask questions.
A lack of employer-sponsored 401Ks, unpredictable income, and inadequate financial advice can make long-term financial planning difficult and scary.
But that doesn’t have to be the case. Gig workers can save for retirement and take advantage of benefits not available to full-time employees. However, many freelancers are already planning for retirement.
How can I save for my retirement?
Before you get paid, start saving for retirement. Whether you work full time or as a side business, retirement is an expense to consider. Calculate your rates accordingly, explains Misty Lynch, CFP. It’s important to set and stick to the right rates early on, she adds, as newbies often underestimate their services or take any available business.
If you want to make $ 30 an hour, charge your customers $ 50. With a little planning, you’ll hit your hourly net goal while saving for retirement. As long as you know how much money you want to keep after all of the other financial responsibilities, this strategy can work. The savings don’t seem to reduce your daily needs. Integrating retirement into your business strategy has made this more achievable, says Wudan Yan, a freelance journalist and business consultant. She co-hosts The Writer’s Co-op, a commercial podcast for freelancers, with Jenni Gritters. To cover all the expenses and benefits due to “Employee You”, “Employer You” must invoice enough customers.
Is there a better option in the gig economy?
No HR department or company will require you to automatically enroll in this 401K plan. Gritters cites this as the main reason many self-employed workers don’t have retirement accounts. It’s not as easy as checking a box, and no one will ever “push” you to do it. Contract workers and gigs still have plenty of retirement choices. Anyone who earns income can contribute to an IRA, explains Lynch.
Online services like Fidelity or Charles Schwab make it easy for freelancers to open an IRA or Roth IRA. It’s easier than most people think. However, both accounts have annual contribution limits of $ 6,000, and a Roth IRA includes income limits. A Solo 401K or SEP-IRA is a good option for contract employees who earn too much to contribute to a Roth IRA. These programs are designed for business owners, even if you are the only employee.
What should I give?
Like many financial discussions, it will depend on the position of the individual. Yan contributes a maximum of $ 6,000 per year to his Roth IRA. It helps to see it as the cost of a huge feature article or a few projects over a year. Others may donate monthly, biweekly, or any other schedule that suits them. Lynch emphasizes thinking about the end result. Some people just want to work for a limited period, or maybe they just want to save as much as possible. Knowing your end goal, whether it’s saving money or time worked, allows you to “reverse engineer” back to a monthly or yearly budget. She also mentions that donations may vary depending on income.
I have only been independent for a while.
Others are professional freelancers who use gig job to complete their Income between full-time jobs. Either way, Lynch advises opening and funding a retirement account as soon as possible. There is nothing negative, she said, unless you keep thinking abouthis is temporary. Even if it’s only temporary, you are setting yourself up for future success.
How can I “catch up” without saving?
Contract employees can go years without contributing to their retirement. Even though it took longer to start saving, there are ways to make up for it. The best thing to do is start, advises Lynch. She cautions people against trying to save more than they need to make up for lost time. Then if you say, “Now I have to invest 20%,” you will probably stop. Start small and increase your gifts as you progress.
Is there more to know about retirement from the odd-job economy?
Gig employees have full control over their pension plan, just like the self-employed. Unlike a workplace sponsored plan, where your business may have already chosen a broker and investment alternatives, Lynch says you can make all the selections. While it may take more effort up front, having ultimate control over your pension plan is a value you shouldn’t overlook. In summary, you can delay Pay taxes – but you can’t make them go away.