Are You a Freelancer? Here’s How to Secure Your Retirement Nest Egg

In 2024, 72.7 million freelancers made up the American workforce and delivered an estimated $1.5 trillion to the U.S. economy. Freelancing comes with freedom and flexibility, allowing you to choose your projects, set your schedule, and work from virtually anywhere.

But, by definition, freelancing also comes with the need to take complete responsibility for your retirement planning. There’s no employer-sponsored retirement plan with matching contributions. Sometimes, you may not even get steady paychecks.

So, you’ll need a solid savings and investing plan with clearly defined goals and actions that build your financial resources.

Key Takeaways

• Freelancers have multiple retirement account options—like IRAs and solo 401(k)s—so make sure to choose the one that matches your income and goals.
• A clear retirement savings goal gives your retirement plan direction and purpose; early and regular saving then powers the growth of your retirement account.
• A financial professional can help you tailor your retirement saving strategy to your personal and financial goals.

Create Your Savings and Investment Plan

1. Start Early

When it comes to retirement, time is your most valuable asset. Waiting just a few years can mean missing out on thousands of dollars in potential growth because of compound interest.

This constantly growing (compounding) amount of money earns you more interest and a larger account balance with every passing year. Time plays a crucial role.

That’s why it’s so important to start saving and investing as soon as you can.

So even if you’re still establishing your freelancing career, do what you can to set aside something starting now. This will have a much bigger impact on your financial results than playing catch-up later.

“One of the biggest mistakes freelancers make is not prioritizing retirement planning early enough. Without an employer-sponsored plan, it’s easy to put retirement on the back burner, ” said Vanesa Mullin, financial advisor and growth and development director at Northwestern Mutual. 

Watch It Grow

See for yourself how compounding can supercharge your savings. Check out the compound interest calculator offered by the U.S. Securities and Exchange Commission.

2. Choose the Right Retirement Account

While freelancers may not have access to a traditional 401(k), they still have several options available to them, each with their own benefits and drawbacks.

“If you’re just getting started, consider opening a Roth IRA or Traditional IRA. These are great entry points, but they do come with income and contribution limits,” explained Mullin.

For 2025, the contribution limit for IRAs is just $7,000 compared to $23,500 for 401(k) plans. So, if you want to make greater contributions, you may consider looking into a SEP IRA or solo 401(k).

“As your income grows or if you’re looking to contribute more, you may want to explore a SEP IRA or a Solo 401(k), which typically allow for higher contribution limits.”

"The best option often depends on your income level, whether you have employees, and how your business is structured (e.g., sole proprietor, LLC, S-Corp). With so many options out there, sometimes the best thing is to just start with one and build from there."

3. Set a Savings Goal

To build a valuable retirement fund, it’s important to save with intention, not just when it’s convenient.

Rather than contributing randomly, set a clear savings target based on your income and retirement timeline. This doesn’t have to be a rigid number; it can be a percentage of your net income that adjusts with your earnings.

“A good rule of thumb is to aim to save 20%–25% of your net income annually. That may sound like a lot, but setting up automated monthly contributions can help make it more manageable. The key is to pay yourself first. If you prioritize your retirement savings before other expenses, it becomes a habit,” Mullin noted.

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"And during slower income months, it’s okay to pause or reduce contributions—as long as you get back on track when income picks up again. Flexibility is key, but consistency over the long term is what makes the biggest differences."

4. Invest Wisely

Investing is one of the most effective ways to grow your retirement savings beyond what a traditional savings account can offer. By putting your money into stocks, bonds, mutual funds, or ETFs, you give it the greatest potential to earn compounding returns.

“All investing carries risk, including the potential loss of principal invested, but diversifying your investments and consistently contributing—even if it’s a small amount—can add up over time,” explained Mullin.

5. Keep Business and Personal Finances Separate

One of the best financial habits freelancers can adopt is keeping their business income and personal spending separate.

Open dedicated business, checking, and savings accounts and pay yourself a consistent salary if possible. This clarity makes it easier to track income, set aside taxes, and determine exactly how you can contribute to retirement without dipping into business funds or under-saving.

6. Protect Your Savings

Unexpected illness or injury can sideline you from work and derail your retirement planning. If you suddenly can't work, you'll probably have to dip into your savings.

An emergency fund is always helpful, but it may not always protect your savings.

What can help is disability insurance, which can be used to replace lost income under unforeseen consequences.

"Consider protecting your income with short-term or long-term disability planning options. That way, if something unexpected happens, you’re still financially covered, and your retirement plan doesn’t take a hit," Mullin stated. 

Work With a Financial Professional

Freelancers don’t have to navigate their retirement planning alone. The right financial professional can help you choose the ideal retirement account, create a savings strategy, and adjust your plan as your income fluctuates.

“Freelancers often also skip out on professional guidance, when a financial planner or CPA could help maximize their savings based on their specific business structure and goals,” Mullin said. 

The Bottom Line

As a freelancer, securing your retirement nest egg is your responsibility. It takes discipline to build, but it doesn’t have to be complicated or overwhelming.

With the right account, a clear savings plan, and solid financial habits, you can build a future that supports your dreams and independence well into retirement.