retirement savingsPull up most financial articles doling out advice for those looking to start saving and investing, and you’ll likely read a line that goes something like this: “Open a 401(k) with your employer and contribute at least enough to get the match. It’s like free money!”

This is not only true but some of the best advice you can give to someone who wants to start building wealth. Claiming an employer match in your retirement account should be your first money move.

But what happens when you don’t have an employer and you’re your own boss? How can freelancers save for retirement?

You Don’t Need an Employer to Save for Retirement

If you’re self-employed as a freelancer or independent contractor, the burden of saving for retirement does fall on you. There’s no company to help you out with a little free money thrown your way and you don’t get to take advantage of special accounts like 401(k) plans.

But that doesn’t mean there’s nothing you can do about it, or that you don’t have any options. Just because the obvious choice isn’t available is not an excuse to not save and invest for your future!

Start by educating yourself on some of these retirement savings options for freelancers:

Traditional and Roth IRAs

Anyone can take advantage of individual retirement accounts, or IRAs. There are two different types to consider: traditional and Roth. The traditional IRA is similar to an employer-sponsored 401(k) plan, in that your contributions are tax-deferred. You’ll be taxed on your withdrawals when you make those in retirement.

By contrast, contributions to your Roth IRA are taxed in the year you make them — but qualified withdrawals can be made tax free. This means the earnings in your account grow tax-free.

The contribution limits for both are the same: $5,500 if you’re less than 50 years old, and $6,500 if you’re over 50. The Roth IRA does have an income cap, so be sure to speak with a financial professional before opening an account to ensure you qualify to contribute to the type of IRA you’re interested in.

Solo 401(k) Plans

As the name suggests, solo 401(k) plans are retirement accounts for self-employed individuals who don’t have employees. (Thus the solo: it indicates “one participant” in the plan.)

Solo 401(k)s allow you to act as the employer and the employee for yourself, enabling you to contribute more to your savings. Some plans allow you to make loans from the account, just like other 401(k)s offered through employers — though this isn’t recommended as it could jeopardize your retirement goals.

This type of account makes good sense for business owners making high incomes because the contribution limit is much higher than some of the other retirement accounts available to independent workers. But they’re also complicated to set up and come with many rules and stipulations. For freelancers earning less than six figures, other accounts may provide a better fit.

Simplified Employee Pension Individual Retirement Account

This plan, better known by its acronym, SEP IRA, is another retirement savings vehicle that freelancers can take advantage of. A SEP is similar to traditional and Roth IRAs, but it allows for higher contribution limits and you can only contribute to one if you have some form of 1099 income.

You can contribute up to 25% of your net income or $53,000, whichever is less. Your contributions are tax-deferred, which can save you a lot of tax dollars as a freelancer.

SEPs offer a great amount of flexibility for a few reasons:

  • You can contribute to this account if you’re independent and have no employees.
  • You can set up SEPs for your business if you have employees (but you must contribute to their accounts if you do so).
  • You can contribute to this account as long as you have some form of 1099 income, which means you can be self-employed part-time and still eligible to contribute. This makes SEPs a great option for those running a side business in addition to working a day job.


Yet another type of IRA is the SIMPLE IRA. SIMPLE stands for “Savings Incentive Match Plan for Employees.” This account operates in much the same way as a traditional IRA, but allows for higher contribution limits. SIMPLEs can be set up by an employer or by anyone who’s self-employed.

Like SEPs, SIMPLEs are tax-deferred which can reduce your tax bills in the years you contribute. If you choose to set up these accounts for employees one day, you must contribute at least 3% to their plans — but your contributions are tax-deductible.

Contributions to SIMPLEs are limited to $12,500.

Which Retirement Savings Option Is Right for You?

There are many variables in play and a single article can’t make a custom recommendation for you. Start by doing your research and asking questions to get an idea of your options. Before making a final decision, it may make sense to speak with a certified financial planner who understands your need as a self-employed freelancer.

If you want to work with a professional, seek out a fee-only financial planner. NAPFA is a good place to start; they’re the biggest organization of fee-only planners in the nation. XY Planning Network is another good organization to search, as many of their planners specialize in working with freelancers and entrepreneurs — and they all work virtually, meaning you can find your ideal planner no matter where you (or they!) live.