Saving For Retirement as a Gig Worker

In today’s world, it’s not at all uncommon for people to be “gig workers,” which means they work for themselves or as independent contractors. If you fall into this category, you may be wondering how to save for retirement and if it’s even a possibility for you.

The answer is that you absolutely should save, not only for your future but to help benefit your current tax situation as well. And, fortunately, there are some easy ways that you can start saving now.

An IRA

One simple option to save for retirement is to open up an IRA, which will allow you to contribute up to $6,000 (or $7,000 if you’re 50 or older) for tax year 2019.   

If you opt for a traditional IRA, you can deduct your contribution amount if you have enough earned income to cover it and if you meet required income thresholds.

Should you choose a Roth IRA, your contributions won’t be tax deductible, but your disbursements after you reach 59 and a half aren’t taxed. However, make sure you don’t exceed the allowed income limits, or you won’t be able to contribute to a Roth IRA.

Since the rules about Roth IRAs can be a bit tricky, it’s probably best to talk with a financial advisor if you’re considering this savings option.

A Solo 401(k)

Many traditional workers can benefit from a 401(k) plan offered by their employer. If you’re not traditionally employed, however, and are just a gig worker, you can still set up a 401(k) for yourself, known as a Solo 401(k).

With a Solo plan, you’ll be able to contribute up to $19,000 or $25,000 if you’re 50 or older in tax year 2019. And, since you’re both employer and employee in this arrangement, you can contribute not only your income but also up to 25% of that income amount as an employer contribution.

As you can see, gig workers, just like traditional workers, do have options for saving for retirement. These are just a few of many, so find what works for you and then take full advantage of it.