Love Your Work Lifestyle? Make Sure You Show Your Retirement Plan Some Love as Well.
Published on February 12, 2015
Americans are taking the term “work/life balance” to heart and turning it on its head by freelancing or becoming their own boss. According to a new, landmark survey conducted by the independent research firm Edelman Berland and commissioned by Freelancers Union and Elance-oDesk, more than 53 million Americans (or 34 percent of the workforce) are doing freelance work.
This flexible work lifestyle has many tangible benefits such as: more control over where you work, when you work and the type of work that you do. However, being part of a contingent workforce means that the responsibility of building retirement savings is a contingency plan for which everyone needs to plan and take on a very active role.
Whether you are starting out in your career, self-employed or doing freelance work to bridge yourself to retirement, here are some solid ways to plan for your retirement.
- For freelancers and the self-employed: A SEP IRA or Simplified Employee Pension plan is perfect. A SEP plan provides employers with a simplified method to make contributions toward their employees’ retirement and, if self-employed, their own retirement. Contributions are made directly to an Individual Retirement Account or Annuity (IRA) set up for each employee (a SEP-IRA).
- For the self-employed or business owner: A SIMPLE IRA plan or Savings Incentive Match Plan for Employees allows employees and employers to contribute to traditional IRAs set up for employees. It is ideally suited as a start-up retirement savings plan for small employers not currently sponsoring a retirement plan.
Building retirement savings needs to be part of any work/life balance plan; no matter how flexible life is now, the future is unknown.
Alternative investment options—
A Valentine for self-directed retirement plans
For financially savvy investors who understand alternative investment options, a self-directed IRA can be a good way to build retirement wealth more aggressively. A self-directed retirement plan allows individuals to invest in nontraditional assets not allowed within typical retirement plans; these alternative assets include real estate, mortgages, unsecured loans, private hedge funds, precious metals, limited partnerships, commercial paper and notes and more to bolster their retirement efforts. Individuals who already know and understand these types of investment vehicles, and who want to make their own investment decisions, find a lot to love about self-direction.
At Next Generation, our professionals are available to answer questions about self-directed retirement plans and our transaction specialists ensure you are investing within IRS guidelines. Since we do not give investment advice, we strongly recommend you consult your trusted financial advisors about your investments and any tax implications they have for your unique situation.