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How to Get Prepared for Your Retirement Years in the US

Today one-third of the workers in the USA are freelancers, and this number will potentially grow to 40% next year. If you’re reading this, you’ll probably one of those hard-working people making money doing freelance jobs. If you are indeed an independent worker, setting up an insurance and retirement plan should be on the top of your to-do list. Based on the Betterment Survey 2018, many self-employed do not perceive this such a high priority, even if they really should, as explained on Pensions Expert for example. And while many young freelancers, in fact, look at their retirement that something will happen in a distant, blurry future, some have problems understanding the regulations and the different plans offered.

Below you’ll find (almost) everything you need to know about the retirement schemes in the US. It could also help you if you’ll join other freelancers in your city.

retirement-scheme-for-independent-contractors
Photo by Brooke Cagle on Unsplash. As a freelancer, you must have a long-term financial plan, including a retirement scheme for self-employed workers.

While you probably can’t set up 401(k) or 403(b) plan, as those are sponsored by employers, you should not be worried. As a self-employed doing delivery, driving or other freelance jobs, you could sign up for Traditional Individual Retirement Account (IRA), a Roth IRA, or a Simplified Employee Pension IRA (SEP IRA).

Traditional Individual Retirement Account (IRA)

Anyone with earned income has the possibility to open an IRA. If you select this retirement scheme, you can probably deduct your contributions on your tax return. In 2018, individuals could contribute up to $5,500, or $6,500 over the age of 50.

You’ll pay taxes related to your contributions only after retirement. Therefore, it is advised to consider when you want to pay your taxes. Of course, no one is able to see into the future, but if you think you will pay less as a retired person, you should definitely consider this retirement scheme.

More info here!

Roth IRA

If you’re more or less certain that your future tax rate will be higher, then probably Roth IRA is the retirement plan you need. With this scheme, you’ll make contributions with money you’ve already paid taxes on.

Provided that you set up the plan at least five years before you start withdrawing your money and one of these conditions (age 59½, death, disability, qualified first time home purchase) is met, you don’t pay taxes when retired. For you and some fellow freelancers, that can also be a relief.

More info here!

Simplified Employee Pension IRA (SEP IRA)

SEP IRA is specifically for self-employed workers. It doesn’t matter if you do gigs on the side in your spare time only, you can still open this plan without any obstacles. In the case of SEP IRA, the contribution limit is set higher, and the actual sum depends on your income. However, it is similar to IRA in a sense that you start paying taxes on your distributions only after your retirement.

More info here!

So, let’s check out some app jobs that could boost your income!

Find delivery driver jobs in Miami, Atlanta, New York City, Washington DC, Orlando, Baltimore, and freelance opportunities in Boston, San Francisco, New York City, Washington DC, Baltimore, Charlotte, Houston, Los Angeles and in many other cities in the US.

retirement-scheme-for-independent-contractors
Photo by Andrew Neel on Unsplash. As a freelancer, you can work from home, a café, or another state or country. A retirement scheme could perhaps help you and other self-employed workers to keep on living a flexible lifestyle well after your retirement.

A Short Intro to How to Save for a Retirement Plan

It is one thing to talk about savings, and it is completely different to actually be able to save up some money monthly. Everyone knows that because we all have to be strategic about our incomes and expenses. We’d like to invite you to consider the following steps. It helps many of us, so, hopefully, it makes you better with money as well.

1 Start with yourself
That’s right. You are the epicenter of all of this. We suggest that you do a quick assessment of yourself. Write a list of reasons you don’t or can’t save up a smaller sum every month. Does it have to do something with the nature of your job(s), lifestyle, future plans, etc.?

By being able to answer the question why, you could probably create a master plan to increase your (yet non-existence) savings.

2 Every penny counts
Whether it’s 20 dollars or 200 dollars you can put aside monthly, that’s a sum. You must get used to thinking about not spending all your money at once. As a freelancer, you probably know that some months could result in a lower number of gig jobs than others.

In other months, you may be swamped and wish to work less. Those days, you could transfer more money to your savings account. But even just saying no to the 50th takeaway coffee, you could boost your future.

It is also a good idea to think about a certain amount to keep, let’s say 500 dollars a month, or so.

retirement-scheme-for-independent-contractors
Photo by Dai KE on Unsplash. Monitor your expenses regularly whenever you work with a platform listed on AppJobs, or some other companies!

3 Documentation helps
Whether you log in to your internet bank weekly or use some apps or tools to check on yourself, just keep doing that. This way you could find those elements you spend the most money on, and you might be able to eliminate those. Of course, we don’t refer to food, transportation and such that are necessities. But you could easily spend fewer nights out than before, for example.

Even an Excel sheet could help you find your weakest link.

4 Think about automation
As briefly touched upon, there are some tools and app, you could use to track your activities. When setting up a retirement and insurance plan, you could also pay them automatically every month. And you spend the remaining money as you wish. If something unexpected happened, you could find a gig on AppJobs to supplement your preferred sum.

Have a look at some other app jobs you can work with!

Check out pet-sitting jobs in the US, in cities such as Atlanta, Pittsburgh, San Jose, Boston, Seattle, Cleveland, and Portland.

Check out online selling jobs in New York City, Austin, Sacramento, Denver, Albuquerque, and many other places in the States.

You can even connect with other moneymakers to exchange your experience and best practices:

Join our Facebook Group for AppJobs Members
Join our Facebook Group for Pet sitters
Join our Facebook Group for Freelancers
Join our Facebook Group for Drivers/Deliverers

Paulina Bajorowicz joined Appjobs in November 2018 and she is now the Content Marketing Specialist. She manages Appjobs blog and social media channels, coordinates outreach activities and cooperates with journalists and content creators around the gig economy.