Many freelancers seldom think about the far-off future.
You might have a 1, 5, or even a 10-year plan, but you probably aren’t thinking about retirement yet. After, you need to continue to grow your business and build your income so that you’ll be able to retire in the first place.
However, retirement is something that you should be thinking about now, regardless of how far along in your freelancing career you are.
Freshbooks has a great article in which they discuss 5 common retirement account options for freelancers.
If you haven’t thought about retirement yet, now is the time to do so.
“Self-Employed 401k. If you’re a freelancer – and always intend to remain a solo operation – one of the best options available to you is the Self-Employed 401k. Available for single business owners without employees, this retirement account lets you sock away salary deferrals of up to $17,500 for 2014 and $18,000 for 2015 – far more than you can contribute to a personal IRA or Roth IRA.
In addition, participating in a Self-Employed 401k offers your business significant tax advantages. Not only will you be able to deduct your contributions from your taxes, any money you contribute will grow tax-free in the account (as long as you meet plan requirements on when distributions can begin). Catch up contributions of $5,500 for 2014 and $6,000 for 2015 (if you’re older than 50) and profit sharing contributions are also allowed on this plan, potentially helping to reduce your tax liability even further.”
Check out the other 4 retirement account options at FreshBooks.