How to Catch Up on Retirement When You’re Self-Employed

Having enough money saved for retirement is a crucial concern for many Americans. With more people becoming self-employed, it’s becoming increasingly difficult to invest enough money for retirement. However, there are ways to catch up on retirement savings.

Having enough money for retirement is a big deal.

When you work for yourself, you don’t get special 401(k) benefits. Nor do you get a match program to help you stay on track. People are living longer these days as well. Therefore, a common rule of thumb is to at least have the same amount as your annual salary invested by the time you’re 33.

The self-employed, or freelancer.

If you are self-employed and have nowhere near that much saved or aren’t on track to have that much, here are a few things you can do to start catching up.

Consider reigning in some of your business expenses.

Entrepreneurs tend to have a ton of business expenses. Many are necessary to keep your systems running smoothly so you can continue to make money.

On the other hand, some expenses may be a little excessive. If you want to catch up on retirement savings, you’ll need to prioritize investing by freeing up some money.

Do an expense audit and decide whether you can cut or reduce some expenses. You may be able to insource some tasks without spending too much time. Don’t feel like you have to skimp on valuable tools and resources you depend on.

You can even extend this practice to your personal budget and reduce some of your everyday expenses. As a result, you’ll free up more money to contribute to retirement.

Open a SEP IRA

If you want to invest more money, you’ll need to use the right vehicle to do so. While a Roth IRA is a great retirement account to contribute to when you don’t have employer benefits, you can only currently contribute a maximum of $ 5,500 per year ($ 6,500 if you are 50 and up).

With a Simplified Employee Pension Plan (SEP IRA) you can currently contribute up to 25 percent of your net annual earnings or $ 54,000 – whichever is less.

Contributing to a SEP IRA allows you to put so much more money into your retirement account and in less time.

You can still contribute to other tax-advantaged accounts but diversifying your portfolio can really help.

Pay yourself a salary.

One of the most common reasons to bypass investing in retirement when you’re self-employed is because you may never know exactly how much you’ll earn each month.

The best way to regulate your income is to pay yourself a regular salary each month or every two weeks. Decide what your average earnings are and look at your budget to determine how much you need to live on each month.

Live below your means.

If you are living below your means, you should have some money leftover for investing, business expenses, and savings. Add retirement contributions to your salary amount so you can consistently add money to your account each month regardless of what you earn.

Dedicate a client or income stream to retirement.

Freelancers and small business owners can find more success by diversifying their income even if it involves adding a single extra stream of income.


One way you can prioritize catching up with retirement contributions when you’re self-employed is to dedicate a specific income stream solely to retirement. For example, if you freelance and have 10 clients, choose one and transfer all the income you receive from them straight to your retirement account.

If you sell three different products, dedicate income from one of them to retirement. This is on top of what you’re already saving. This can seem risky to do. However, start with your smallest income stream to ensure you won’t see a huge shift in revenue.


Finding money to set aside for retirement can be a challenge especially if you’re self-employed and have a fluctuating income. Consider these four strategies to catch up on retirement. Remain mindful of your spending and bump retirement savings up on your priority list.

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