The following is a guest post by Charles Mburugu. If you would like to write for this blog, please check out the guidelines here.
Retirement is a subject that many freelancers try to avoid. When the topic is brought up, many freelancers will proudly proclaim their plans of working until they die. However, it makes sense to plan for retirement. The fact is that no one knows what the future holds, and having a little money saved will make it easier to take a break when the need arises. You could also get some benefits presently from saving from retirement, like a concession on your taxes.
When is the Best Time to Start?
Whether you are fresh out of college or nearer an age at which you would wish to retire, you need to begin thinking about retirement today. A little money invested early in life can grow and compound into a larger amount of cash when you need it. By waiting for only 10 years to begin saving for retirement, the amount of cash you need to need to save to attain the same goals may easily triple. However, freelancers have to deal with the special consideration of an often unpredictable and unsteady income to manage. This makes saving for retirement and money management particularly tricky, but not unmanageable.
Retirement planning calls for a certain mindset, just as growing a freelance business does. As a freelancer, you need to think about retirement as another financial element of your business. You must plan for business growth, work out your cash flow and organize your retirement savings in a similar way.
Getting your Finances in Order
Before you go out shopping for a retirement plan, it is important to have a general idea of your finances. You will need to ask yourself some questions, and if you can’t settle on some answers, you will need to look more closely at how you manage your finances. How much do you think you can afford to set aside for retirement without significantly changing your current spending? How can you adjust your spending to increase the level of your savings? These are questions asked by most financial planners, and knowing the answers early can help you seek for better information.
How Do You Go About Planning?
Saving for retirement is a relatively simple process. It is vital to set aside a percentage of your income to retirement savings. With variable earnings though, it requires both a system and discipline. If you consistently put away a portion of your earnings every month, at one point you will have a good cushion for retirement. However, despite the simplicity of the exercise, it would help to think through your options with a financial professional. Financial planners offer proven methodologies and up-to-date knowledge to help individuals attain their financial goals, and may even offer freelancers a level of accountability in saving their cash.
While growing your freelance business, you don’t have much time to study on the benefits of all retirement accounts being offered. A financial planner can help you get a clear picture of the situation and navigate all sorts of options, thus allowing you to focus on the growth of your business. Your accountant may give you an idea of which retirement account lowers your tax bill the most, but if he is not well educated in financial planning, you will likely need some more help.
Selecting the Right Financial Planner
Because there are many variations in how freelancers earn, save and spend their money, there is no ideal retirement plan that works for all freelancers. That is why it is vital to consult a financial planner to ensure you get the appropriate advice for your personal situation. There are two kinds of financial planners; planners who charge commissions on financial products sold and fee-only planners who charge you only for the services they offer you. Regardless of your approach to retirement planning, you should restrict your search to fee-only planners.
Finding a financial planner you are comfortable working with is vital. The best way of finding a qualified financial planner is to ask for referrals from freelancers that may have used their services. Among the services a financial planner can offer is a more detailed discussion of your present financial situation and your retirement goals. The financial planner will be able to inform you of the many retirement plans available. The wide range of differences between insurance-based retirement savings plans, personal pension plans, SEP IRAs, Simple IRAs, individual 401(k) plans and Roth IRAs, make some guidance very helpful. A financial planner may also talk about the problems you may face with your retirement plan.
The Need for Flexibility
Unlike many other professionals, freelancers need to be very flexible when it comes to retirement planning. A plan which requires saving a significant amount every month might not work with the fluctuations of a freelancer’s income. There are retirement accounts and savings plans that out there that take this factor into consideration, allowing individuals to make decisions such as saving a small amount monthly, and then making a larger contribution at the end of the year.
About the Author: Charles Mburugu is a professional content developer and an entrepreneur. He often writes about real estate, finance, business start-ups and internet marketing. In the past few weeks he has been writing for blogs where you can get the latest symantec code and coupons go daddy.