FreelanceFolder: Pretending that retirement will never happen to you won’t keep it from coming one day. For many traditional employees in the daily rat race there are 401ks and investments, social security payments and corporate pensions. This is all leading to that day when the employee chooses to throw in the towel and spend their golden years in leisure.
Sunday, October 16, 2011
How Freelancers Can Start to Prepare for Retirement
FreelanceFolder: Pretending that retirement will never happen to you won’t keep it from coming one day. For many traditional employees in the daily rat race there are 401ks and investments, social security payments and corporate pensions. This is all leading to that day when the employee chooses to throw in the towel and spend their golden years in leisure.
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None of these ideas bothered me until I hit thirty. By that point, most of my other friends were already married [maybe even children, too], owned their house and had CAREERS. Their retirement was already being prepared for. IRAs and mutual funds hurt my brain when all I could focus on was making enough money to pay rent and buy food.
The only thing that's changed since then is that I've gotten older and even if I can't ever really RETIRE from work entirely there going to come a point in my life when I'm not going to be able to heft a 4x8 platform across a stage and that'll mean less work and that'll mean less money.
Hopefully, that won't necessarily mean not being able to pay the rent.
This article brought up one piece of the puzzle that made me angry. Certificates of Deposit are now rendered utterly useless. The interest rate has dropped significantly below the rate of inflation. Also this article states that the idea of IRA's and mutual funds are the answers but the performance of all things tied to the stock market has been abysmal for almost a decade now. My parents have lost a significant amount of their IRA money over the past decade. The magic bullet of the IRA supplanting the idea of a pension is ludicrous and the market will no longer give you what a pension would have done for you. At this point the major companies are no better for retirement than freelancing.
I think that the points raised in this article are issues that most freelancers that have had work become sparse for even a month are a little bit more familiar with then most people give them credit for. The upside to freelancing is that you can sometimes make a decent amount of money in a short period of time, the downside is that that may be the only money you make for several months if you are not lucky. While I do not think that any freelancer would describe themselves as ever financially stable, I think more are slightly more prepared then this article gives them credit for.
IRAs are a good option for those of us who expect to be in a higher income bracket later in life than we are now, which is applicable to most students. While in the specific case of the past three years, the best investment may have been cash, money tends to grow. Investments grow, and debt grows.
In order to adjust for inflation, investment is a must for retirement. The goal is to begin investing at a young age so that by the time you need to be concerned with retirement your investments are making more money per year than you could afford to put into them. IRAs, stocks, mutual funds, CDs, bonds, and savings accounts are each different methods of doing this, where some are more risky and potentially profitable and each has its own tax implications.
Yeah, this definitely brings up some points I've been considering recently. Figuring out smart things to do with my money has been a big deal for me lately. Historically the market is the best place to put that dough. But man is there a big world out there when it comes to investing. Learning how to smartly manage your money, in addition to trying to freelance enough to pay the rent seems like a major headache I'm not quite ready to tackle. However, it seems like jumping the gun as soon as possible might be the best bet. Hopefully I'll be saving as soon as I can after college.
It's hard to plan for retirement while freelancing. Besides saving for retirement there's the issue of paying your bills at the moment. If you're lucky it's not a problem--but I bet that almost every freelancer has, at some point in their life, not known how they were going to pay their rent the next month.
I think the tips offered in this article can help freelancers to plan for retirement. However, I don't think there is a one size fits all solution. Unfortunately in freelancing there is no way to plan very long-term for income. Maybe the best thing to do in addition to the tips offered in this article is to save what you can, when you can.
Start saving your money! This article does a good job of laying out the options for freelancers looking to start saving for retirement. The earlier you start the more you will have. As young professionals, we often don't think about the consequences of spending our money freely. Start the saving process early you won't regret it.
Articles or classes about topics like this just completely freak me out. While the basic principles are common knowledge and in most case common sense, the amount of different acronyms with numbers attached that we will need to be come intimatly knowledgeable about are astounding.
However, now is the time at which it is almost the most important to start establishing these types of fallback plans so that as you move from job to job, they remain consistant.
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