In examining the recent results of the Freelance Forecast 2010 survey, one particular answer shocked me: 54% of the respondents said they did not contribute to any retirement plan in 2009. (Even 46% of those who’ve been freelancing for 10 years or more didn’t contribute.) There might be some reasonable explanations—bad financial year, already contribute the max to a spouse’s account, already independently wealthy, want to keep freelancing forever, want to pay more taxes—but it still gives me pause to think that freelancers make a major financial mistake by not adequately preparing for the future.
Whether you choose to start up a Roth IRA, SEP IRA, individual 401(k) or other type of plan, I highly recommend that you visit Random Roger’s Big Picture Blog. He’s a professional portfolio adviser and comments frequently on the size of the nest egg you’ll need in retirement…which is likely bigger than you realize if you don’t want to outlive your money. (Arguably the biggest financial mistake of all.)
Here are some other links to get your research started:
- Fidelity’s IRA Center
- Scottrade Retirement Investing Center
- Charles Schwab Small Business Retirement Plans
CORRECTION: Due to an Excel error, I originally cited the figure at 57%. That was incorrect—it was 54.2% to be exact. Doesn’t take away from the fact that it’s a financial mistake—but I need to recut that part of the video to fix my fat-finger mistake. Oops!