Closing the Freelancer Retirement Gap
Freelancers lack employer 401k matches (typically 3-6% of salary), employer pension contributions, and automatic retirement savings, creating a retirement savings gap.
A traditional employee earning $80,000 with a 5% employer match receives $4,000 annually in free retirement money—over 30 years at 7% growth, that is $379,000.
Freelancers must compensate through higher earnings and disciplined saving.
Options include Solo 401k ($69,000 contribution limit for 2025), SEP IRA (up to 25% of net income or $69,000), and Traditional/Roth IRAs ($7,000 limit).
Solo 401ks offer the highest contribution limits: $23,000 employee deferral plus up to 25% of net income as employer contribution.
A freelancer earning $100,000 net can contribute $43,000 annually (versus $23,000 employee limit), catching up over time.
However, inconsistent income makes regular contributions challenging.
Strategies include: setting aside percentages of each payment for retirement (20-25%), automating transfers during high-earning months, using Roth IRAs for flexibility (contributions can be withdrawn penalty-free), and diversifying into taxable accounts for pre-retirement access.
Calculate the gap: employees with 5% match save $4,000 annually on $80,000 salary—freelancers must save an extra 5% beyond their own retirement goals to match this benefit.