5 Ways Gig Workers Can Save for Retirement


Are you a freelancer, gig worker, or a self-employed person looking for ways to save for your retirement?

A huge number of people are realizing the health, wealth and other long term gains of working for yourself than being an employee. In the old days– due to the rise of the industrial revolution– Americans were conditioned to work for a corporation until they got old and then enjoying their twilight years on pension or retirement plans offered by the employers. But things have changed in the past decade.

Gigi workers are on a rise and they are looking for ways to get the same security and benefits that their forebears had. But is it possible to be financially secure while working for yourself?

Here are a few sensible ways a gig worker can save for retirement.

1. Contribute to a self-employed 401(k) or solo 401(k) plan

A self-employed 401(k) or solo 401(k) plan was created for self-employed people who work for themselves and have no employees working for them(other than their spouse, children, family members, etc). This retirement plan has similar benefits to the one that is provided by an employer. You have to contribute each month from your pre-tax earnings. So, you don’t have to feel insecure(as for as your retirement is concerned) just because you don’t work for an organization like others.

2. Open a SIMPLE IRA account

SIMPLE IRA stands for “Savings Incentive Match Plan for Employees- Individual Retirement Account”. With SIMPLE IRA you can contribute each year up to $12,500. People over 50 years of age can also make an additional contribution of $3,000. This makes your annual contribution of $15,500(from pre-tax earnings). Although the contributions are quite less compared to other retirement plans mentioned in this post, a freelance worker with low income might find it suitable.

3. Invest in Mutual Funds

Want the safest and the most profitable investment option for your retirement?

Mutual funds might be your safest bet. According to a report by the Investment Company Institue, “an estimated 100 million individual Americans in 56.2 million households owned mutual funds in mid-2017”. When almost every household relies on mutual funds for their retirement savings, why wouldn’t you, as a freelancer or a self-employed person, invest in them?

4. Make larger contributions with Simplified employee pension (SEP)

Want a retirement plan tailor-made for a gig worker?

SEP IRA is a traditional IRA for a freelancer, gig worker, contract worker, or a self-employed person. Similar to other plans like 401k, the contributions you do to the SEP-IRA are tax-deductible.

Allowance to make larger contributions is the biggest benefit of choosing a SEP IRA as your retirement plan. According to the IRS website, a self-employed person can contribute as much as 25 percent(annually) of his/her net earnings from self-employment. The maximum limit is $56,000 in 2019. This is way higher than the SIMPLE IRA plan.

5. Set up a Payroll deduction IRA

Payroll deduction IRA might be the right choice for someone looking for an easy and fuss-free retirement plan. To get started, you have to establish a traditional or Roth IRA with a financial institution. Secondly, make contributions to the financial institution as per your IRA plan. You do have to pay a $10 setup fee and a $10 annual maintenance fee.


Working for yourself has its pros and cons. Not having financial security is one of the cons of freelancing or being self-employed. But with plans like SIMPLE IRA and SEP IRA, you can easily contribute each month and have your future secured.

Leave a Reply

Your email address will not be published.