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Living the freelancers’ life is the dream for many – the ability to be your own boss, set your own working hours, and achieve a higher level of work-life balance. And with over 36% of the American workforce engaging in some or the other kind of freelance work, the gig economy is indeed going from strength-to-strength.

That being said, the working for the gig economy also comes with its own downsides, most of all being the lack of any kind of employer-sponsored benefits and retirement accounts like the IRA or 401(k). Having a clear absence of such a structure makes it very difficult, if not impossible to save for retirement in a clear-cut manner.

With the right perspective, however, this supposed weakness can easily be turned into a strength. Whilst you do not have a solid employer-sponsored 401(k) as a freelancer, you are your own boss and do have the flexibility to make a lot of choices the average employee couldn’t. As a freelancer, you can (and should) take advantage of the options that you do have and can use to save for retirement.

Here are some common investment accounts that you can use to save for the future as a freelancer:

Traditional and Roth IRAs

Individual Retirement Account (IRA) allow individuals to set aside part of their savings for their retirement. As a freelancer, you can choose and work with either of a traditional or a Roth IRA, or even a plan that combines the two. Those aged 50 or less can deposit up to $5,500 into a traditional or Roth IRA or a combined plan. Those over 50 can deposit an extra $1,000.

Any money that you deposit into a traditional IRA is pre-tax, so your savings will be subject to tax when you withdraw them during retirement. Roth IRA, on the other hand, requires you to pay the taxes on the money before you deposit it, making the withdrawn money tax-free.

Opening an account is easy – you can easily do it online through a broker, such as Betterment, Vanguard, or Fidelity.

SEP IRA

A Simplified Employee Pension IRA (SEP IRA) is a retirement account ideal for those who make their living as freelancers. In this plan, workers can add either of $55,000 or 25% of their net earnings – whichever turns out to be the lesser – annually. Accounts can be set up with online like with a traditional IRA, and contributions can be easily deducted.

Solo 401(k)

As the name implies, a solo 401(k) is exactly that – a 401(k) account for a single person. It is similar to the traditional 401(k) in the sense that you can deposit up to $18,500 into the account ($24,500 if you are 50 years old or more), but given that you act as both the employer and employee, it is possible for you to make additional contributions as an employer, and therefore boost your total contributions. Subject to your income and IRS calculations, the total amount you can add becomes up to $55,000 per year.

Make sure to open your account by December 31st of the year in which you intend to contribute – for instance if you want to contribute for 2019, you have to open your account before or on Dec. 31, 2019.

How much should you save for retirement?

The amount one needs to save for retirement is different for everyone as it is based upon various factors such as age, debts, saved money and assets, and current income. That being said, a general rule is to save around 10% to 15% of your income in a retirement account at the very least. The more you can increase the percentage, the better it will be.

Another factor that is you must consider before embarking on saving for retirement is debt load. If you’re among the freelancers who have high-interest loans (like soft loans or pending credit card bills), you should first concentrate on paying-off and neutralizing said debts before you begin to save. This is because the annual interest you would be paying on said loans would be greater than the returns you would be receiving from the retirement savings.

On the flip side, if you have low-interest debts (like federal student loans or mortgage), you should start saving for retirement right away, whilst making sure than you are also paying your loan debt(s).