Here’s a chilling, hardcore reality: If you don’t plan for retirement, odds are you’ll end up working until you depart this Earth. And here’s a not-so-fun factoid to go with it. An astounding 76 percent of Los Angeles-area freelance journalists have nothing saved toward retirement. Odds are, the numbers for other freelancers, including writers, are similar.
You might be in your twenties or thirties right now, when retirement seems a lifetime away, but sixty-five will arrive quicker than you expect. Without a retirement plan and the savings to go with it, you’ll still be working to make ends meet. For instance, if you don’t buy a retirement home or invest in real estate in your early years, chances are that you’ll still have to pay rent from month to month and constantly need to generate income from writing to afford it when you’re older.
But in your mid to late sixties, will you still be relevant and working as a writer? Will you even want to? The way things are going, it’s a safe bet you won’t be able to count on Social Security to keep you afloat. This can mean that without a substantial savings, you can easily find yourself bagging groceries to make ends meet. Sure, you’ll be dining on salmon and tuna, but it will be from a can meant for your feline friend.
Is all this meant to scare the heck out of you? Absolutely!
Begin with a simple savings account
Get into the habit of saving a certain percentage of each check. It doesn’t need to be a lot in the beginning. Five or even ten percent will do. The point is to get you into the habit of saving. It will also help you build an initial minimum amount required by some retirement accounts.
“I’d like to say I’m currently retired,” said Jenny Leonard, a world-traveling freelancer. “No, really. I’m living my dream life right now. I didn’t have to wait for retirement like most Americans to live my dream. However, I don’t just blow all of my money away on fun. I put away money each month into a savings account to take care of me later on,” she said.
Invest in financial planning services
There are a daunting amount of investment vehicles available. Which one is right for your situation can be tough to sort out. Depending on your situation, hiring a financial planner may be worth it. They will review your present situation, your age, and your goals. Then they’ll recommend the best type of account. Be sure to find an authentic financial planner. Some insurance agents will promote themselves as financial planners, but they will try to sell you their company’s products, often annuities or other insurance products, which may not be the best choice for you. Ask around to get some referrals. When you find a few, be sure to ask them if they’ve worked with freelancers. That’s important because a freelancer’s needs are very different from our nine-to-five counterparts.
Those counterparts have the benefit of pension plans, matched contributions to 401k plans, and profit sharing. A freelancer has none of these, and that means you’ll need to put more away for that rainy day. If you’re a member of the Freelancers Union, you’re in luck. The Union offers its members several retirement plan options managed by Charles Schwab Trust Company and Milliman. Plans include the Freelancers Retirement Plan, Solo 401(k), SEP IRA, and IRA.
Check in with an accountant
Finally, in addition to getting the advice of a financial planner, be sure to run your plan by your accountant. They can make suggestions and provide insights that may make your dream of retirement a faster reality.
Starting on the path to becoming a freelance writer will bring with it many challenges but also many rewards. By taking the time to carefully plan your business and create a budget, you will set yourself apart from most freelancers and your competitors who didn’t take the time or do the homework.
“I talked with two freelancing friends yesterday. One had to go in for a cancer follow-up, the other was having an MRI for a possible brain tumor. Life sucks sometimes, but life happens the way we want it to or not.”
When I turned around I was almost sixty. I was just twenty-six the other day. How did that happen? It happened in spite of me. I live in a Fort Lauderdale retirement community. I have a two-bedroom house that’s small enough yet large enough to work for me. The community association takes care of pretty much everything. They paint the house, replace roof every eight years, handle the landscaping, cutting the grass and such. There’re also a couple of clubhouses with pools, a gym, sauna and the like. The big clubhouse hosts all sorts of entertainment events and there are holiday parties. The main clubhouse also hangs residents’ art. And it’s good stuff by some really talented folks. Most of all the neighbors are nice. We’re all from somewhere else and it’s fun to share our histories and even a few war stories.
This kind of stuff comes in real handy when you get older and find out you have a disabling disease. I happen to have Hughes Syndrome, which is pretty much the same as Multiple Sclerosis. You don’t know how things will play out. I talked with two freelancing friends yesterday. One had to go in for a cancer follow-up, the other was having an MRI for a possible brain tumor. Life sucks sometimes, but life happens the way we want it to or not.
Why do I write this? Because, I couldn’t have done it without planning. I saved some dough along the way, made investments and took the advice of folks who are a lot smarter when it comes to money than I am … or will ever be. I practice what I preach. Really. I still work because I like to, not especially because I have to.
As you build your practice, aggressively market your freelance business to create a pipeline of qualified prospects. Doing so will allow you the benefit of taking on only those clients and projects that you enjoy and are a good fit for your business. Mind your credit and cash flow and take care to manage your money. Strive to do good work and exceed your client’s expectations at every step along the way. Do these things and when you’re sixty and looking for a nifty place to retire you can do it.
About the author:
Neil Tortorella is a graphic designer, writer and marketing consultant with over thirty years experience. He is the author of Starting Your Career As A Freelance Web Designer, Starting Your Career As A Musician and The Freelance Writer’s Business Book. Tortorella is a frequent speaker at conferences and business events. His writing and consulting site can be found at www.neiltortorella.com.
Also by Neil Tortorella:
1. How to Generate High Quality Referrals for Your Writing Business (article)
2. A Freelance Writer’s Guide to Using Public Speaking as a Marketing Tool (article)
3. How to Get Tantalizing Testimonials from Your Clients (article)
4. Copyright and Usage Rights for Freelance Writers (article)
5. How to Qualify Potential Clients for Your Freelance Writing Business (article)
6. Avoid These 10 Common Freelancing Traps to Run a More Successful Writing Business (article)
7. Money Management Tips for Freelance Writers (article)