How to Save for Retirement When Youre a Freelance Writer

How to Save for Retirement When Youre a Freelance Writer Heres the bottom line: As a freelancer, you dont have an employer-sponsored retirement plan. Youre going to need to do one of two things immediately to ensure that you arent still working when you hit retirement age: Purchase a retirement savings plan through a financial institution, or save your own money to invest as you see fit. Ideally, a freelancer should do both of these things, starting with either a Solo 401(k), an Individual Retirement Account (IRA), or a Simplified Employee Pension (SEP IRA). Next, use your own savings to make your retirement even more secure. Step One: Budget Everything comes down to budgeting, whether it’s cat food or a tropical cruise 40 years down the road. This is where you’ll find the funds to allocate to retirement, and it will help you understand just how much money you will actually need when the time comes. You need to include all monthly expenses in your budget, and keep them conservative. The income of a freelance writer can fluctuate, so be sure to pay your budgeted items before doing any other kind of spending. On top of monthly budgeting for rent/mortgage, food, utilities, car payments, insurance, and other necessities, experts suggest putting at least 10 percent of your pay into savings, starting right now. You should also be putting a similar amount into your retirement fund each month. Step Two: Open a High-Yield Savings Account Your budgeted savings shouldnt just be left in your checking account or stuffed into a wall safe. Open a high-yield savings account where you can place your savings securely and turn them into more money thanks to a high interest rate. Take a look at your current banks interest rate, and compare with other banks to find the highest return on your small investment. The point of this type of account is to stop you from spending your savings, and to eventually yield small returns on the initial amount. You should try to always have your savings in this type of account, whether the amount is small or large. Step Three: Invest When   your savings have begun to grow, its time to use some of those funds for investments. There are many ways to invest a few hundred or a few thousand dollars depending on where you live. You might choose savings bonds; perhaps you’re more inclined to microloans. Wherever you do choose to invest, make sure it is as secure as possible (in other words, no stock market purchases based on a hunch). The U.S. Series EE and Series I Savings Bonds are available in denominations as low as $50 and as high as $10,000. They offer higher interest and rate of return than other kinds of   savings, which makes them a great option to consider once youve begun to grow your nest egg. Microloan investments, such as those offered through Lending Club, allow you to choose the person or group your money will finance, and receive monthly repayments plus interest. Once youve increased your money through investment? Roll it over and keep the process going. A Certificate of Deposit from your bank is a safe way to invest $10,000 or more. Its Never Too Early to Start The most important thing to remember is that you need to start saving today – not tomorrow, next month or next season when you have the extra money lying around. Budget concisely, invest wisely and watch your money grow.