Due to the rise of the gig economy, many Americans are now working as independent contractors, which can pose significant challenges to their retirement savings. Tim Maurer, a financial advisor, explained that people who rely solely on freelance income might neglect their retirement savings due to the lack of an employer-provided plan. He noted that side hustlers and freelancers don’t have the option to pressure their HR departments to help them save like traditional employment. As a freelancer, here are three options to save for retirement.


For individuals who are self-employed or have a few employees, a traditional pension can be a great way to save for retirement. To be eligible for this type of retirement plan, you must be at least 21 years old and have worked for the same company for at least three years.

According to Maura Cassiday, a vice president at Fidelity, a profit-sharing contribution is often referred to as a retirement plan that’s similar to a pension. It’s typically the employer’s sole contribution.

Employees’ contributions to a SEP IRA can’t exceed 25% of their annual compensation, or $61,000 in 2022, though each worker must receive the same percentage. This type of retirement plan can also be tax-deductible. If you’re self-employed, this retirement plan can also be a great way to save for retirement. The contribution is 25% of your adjusted gross income, or your net profit minus half of your Medicare and Social Security taxes.

This type of retirement plan allows individuals to make different contributions each year and can be very flexible. Like traditional retirement plans, it’s important to note that participants must take minimum distributions.

Solo 401(k)

The only people who can participate in a solo 401(k) are self-employed individuals or businesses run by a married couple. Like a traditional retirement plan, this type of retirement plan allows pre-tax contributions to be taken out of your income. In a solo-401(k) plan, the contributions are made both as an employee and as an employer. This type of retirement plan can be very advantageous for self-employed people, saving them more money than other plans.

As an employee, you can make up to $20,500 in 2022 and contribute up to $27,000 if you’re over 50. On the other hand, as an employer, you can only make up to 25% of your self-employed income. This means that if you make a total of $61,000 or $67,500 in 2022, your total contributions cannot exceed that amount. One of the biggest advantages of a solo 401(k) over other retirement plans is that it allows individuals to make large pre-tax contributions at a lower income rate. This means that they can also contribute more money to their retirement accounts.

Another advantage of a solo 401(k) is that it allows employees to contribute to a Roth account. Unlike traditional retirement plans, this type of retirement plan allows individuals to take no upfront deduction when they make a contribution to a Roth. However, all of the money that you make in the account is tax-free.

Early withdrawals from a solo 401(k) are generally subject to a 10% tax penalty if you’re under 59 1/2 years old. There are some exceptions for this age group. If you have a traditional retirement plan that you’re mainly focused on, a solo 401(k) might not be the best choice for you. Since the contribution limits apply to both plans, it’s important to note that these limits apply to all of your contributions.


The Small Business Administration (SBA) provides a variety of retirement accounts for small business owners and self-employed individuals. One of these is the Simple Income IRA, which allows employees to earn up to $5,000 annually from their employers.

This type of retirement plan is also available for employers and employees. However, the contributions are only matched up to 3% of the eligible compensation. This means that if an employee makes a contribution, their employer must match it. Employees can make up to 100% of their compensation in a solo 401(k). If they’re over 50, they can contribute up to $17,000. Withdrawals from a retirement account are generally subject to a 10% penalty if you’re under 59 1/2 years old. However, if you make a withdrawal within the first two years of your account’s existence, you can avoid this penalty by paying a 25% penalty instead.

If you’re not able to afford to make a traditional or Roth IRA contribution, consider contributing to an individual retirement account. In 2022, contributions to traditional and Roth IRAs will be limited to $7,000 or $6,000 for individuals aged 50 and older. The good news is that the contribution limits for both the SEP IRA and the Simple Income IRA are separate from those for the regular IRA.