Retirement Planning for the Self-Employed: Tools, Checklists, and Expert Tips
Retirement can sound like a far off mythical “someday," especially when it comes to saving—especially for the self-employed. Advice for retirement planning often boils down to “save early and consistently.” Great advice, but when you don’t have employer benefits or consistent income, how do you do retirement planning when self-employed?
For freelancers, consultants, and small business owners, retirement planning for self-employed folks requires extra intention and creativity. But with the right strategies, you can pave the way toward a retirement that’s flexible, meaningful, and secure.
What is Retirement?
Before we explore the importance of planning for retirement, let’s define it.
Traditionally, retirement has meant a post-work, late-in-life chapter when we finally get to enjoy the fruits of our labor: abundant free time, more choices, and ideally, some financial security.
But for self-employed people, the definition can shift. Some might aim for partial retirement—scaling back on clients or transitioning to passion projects. Others may be working toward full retirement while relying on income from business sales or passive income.
Whether you’re dreaming of early retirement, semi-retirement, or simply more flexibility later in life, your plan should reflect your unique path.
Why Retirement Planning Matters (Especially When You’re Self-Employed)
Planning early allows you to benefit from the power of compounding, where your investments grow over time through earned interest, dividends, and capital gains.
But if you're self-employed, you don’t have an employer matching your 401(k), contributing to a pension, or automatically deducting retirement savings from your paycheck.
That means you have to:
Choose your own retirement accounts
Make your own contributions (even during slow months)
Manage tax implications
The upside? You also have more control and a wider range of retirement savings options than many W-2 employees.
Setting Retirement Goals for the Self-Employed
Define your retirement objectives by considering:
Desired retirement age (and whether it’s full or partial)
Expected retirement lifestyle and expenses
Any plans to sell your business, create passive income, or shift into lower-effort work
Tools like Fidelity’s Retirement Score or NerdWallet’s Retirement Calculator can help you set a ballpark target.
Be sure to include self-employed-specific costs like health insurance and long-term care when you estimate your expenses.
Assessing Your Financial Situation
Understanding where you stand financially is key to building your self-employed retirement plan.
Budgeting & Tracking Your Expenses
Start with a clear picture of your income and expenses. With self-employment, this includes:
Irregular income from gigs, clients, or contracts
Business expenses (software, taxes, supplies)
Health insurance premiums and self-employment tax
Use tools like YNAB, Honeydue, or a spreadsheet to track income and identify what’s realistically available to save.
Evaluating Debt and Savings
Freeing up cash is essential. Pay down high-interest debt and build an emergency fund of 3–6 months of living expenses. This reduces your financial stress during lean periods and keeps your retirement contributions consistent.
Retirement Savings Options for the Self-Employed
Image generated by ChatGPT
Solo 401(k)
Best for: High earners without employees
Contributions up to $69,000 in 2024 (employee + employer portions)
Traditional and Roth versions available
Great for maximizing tax-advantaged savings
Learn more via IRS guidelines on Solo 401(k)s.
SEP IRA
Best for: Simplicity and flexibility
Contribute up to 25% of net income (max $66,000 in 2024)
Easy to set up and manage
Tax-deductible contributions
SIMPLE IRA
Best for: Small business owners with a few employees
Lower contribution limits
Less admin than a 401(k)
Employer match required (often 1–3%)
Roth or Traditional IRA
Best for: Beginners or those maxing out other plans
Annual limit of $7,000 (plus $1,000 if over 50)
Roth: contributions are after-tax, but withdrawals are tax-free
Traditional: tax-deferred contributions and taxed withdrawals
You can combine multiple accounts as long as you stay within contribution rules.
Fluctuating Income? Try Percentage-Based Contributions
One of the biggest self-employed challenges is inconsistent cash flow. Rather than committing to a flat monthly amount, consider saving a percentage of every paycheck—for example, 15% of net income goes to retirement. This helps you stay consistent during both high and low income months.
If you’re unsure what you can commit to, start small. Automate a 5% transfer every time you get paid and adjust as your income grows.
Don’t Forget Healthcare and Long-Term Planning
Healthcare costs often spike in retirement—and self-employed people don’t have access to employer health plans. Consider:
Setting up a Health Savings Account (HSA) if eligible
Estimating health premiums + long-term care in your retirement plan
Planning for potential income drop before Medicare eligibility at age 65
Check out Healthcare.gov’s Small Business Guide for coverage options.
Can You Sell Your Business or Monetize Your Work Later?
For self-employed folks, your business is often an asset. Think long-term:
Could you sell your business?
Could it generate passive income (licensing, affiliate content, digital products)?
Could you consult part-time in retirement?
Plan your exit just like any investment strategy.
Creating a Retirement Savings Strategy
Use a calculator to set your target number
Choose the right mix of savings vehicles (Solo 401k, IRA, etc.)
Diversify investments to balance growth and risk
Need help? Start with our checklist for Self-Employed Retirement Planning. Next, check out our post on how to create a financial plan to support your entire journey.
Monitor and Adjust as You Go
Revisit your plan 1–2x per year. Adjust contributions, rebalance investments, and update your goals as needed.
Life is dynamic, and your retirement plan should be too.
You Deserve Rest (Even If You’re Your Own Boss)
Retirement doesn’t have to mean a total stop. For self-employed folks, it might mean scaling back, working by choice, or taking mini-retirements along the way.
What matters is that you build toward freedom and choice—whether that’s retiring at 65 or working fewer hours at 45.
For more tools and guidance, check out:
Want help building a plan that supports your future and your values? Equip Advisory helps BIPOC and LGBTQIA+ folks build thriving, intergenerational wealth—including retirement on your own terms.
📅 Ready to take the next step? Book a free intro call today.
Disclaimer: This article is for general information and educational purposes only and should not be considered investment, financial, legal, or tax advice. It is not a recommendation for purchase or sale of any security or investment advisory services. Please consult your own legal, financial, and other professionals to determine what may be appropriate for you. Opinions expressed are as of the date of publication, and such opinions are subject to change.
