How to Save for Retirement When You’re a Freelancer or Self-Employed

If certain rumors about the future of Social Security are to be believed, the following is indeed a public service message and important not only to writers but to everybody out there who, you know, makes a buck or two on their own:

by Dan Rafter

It’s not easy saving for retirement when you work a full-time job that provides a steady income every month. But if you work as a freelancer, small business owner or independent contractor? Saving enough for retirement can be even more challenging because your income can vary so much each month.

One month, you might rake in the big dollars. The next? Your income might slow to a trickle. Because your expenses don’t follow the same pattern, saving money for retirement can be a challenge.

When you’re self-employed, you also don’t have the benefit of a 401(k) retirement savings plan into which to automatically deposit retirement savings every time you get paid [Update: one participant 401(k) plans exist for business owners with no employees]. Fortunately, you can still save enough for your retirement years even when your income is unstable. It’s all a matter of planning for your golden years and calculating how much you need to save for retirement each month to get there.

Here are five steps to take to save for retirement when you’re self-employed:

1. Be Realistic About Your Retirement Date

Freelancers and independent contractors often say that they can keep working for as long as they need to. But that attitude isn’t necessarily realistic.

“Freelancers are really no different from anyone else,” says Teresa Ghilarducci, economist and director of the Schwartz Center for Economic Policy Analysis at The New School for Social Research in New York City. “They have to get real about how long they will be able to work and how much they’ll need to save to enjoy a comfortable retirement….”

Read it all at Lifehacker