freelance writers

Freelance Writers: Path to Retirement

The idea of being a full-time “freelance writer” is closely tied to the idea of freedom. In many ways, this is accurate. After all, full-time freelance writers can set their own hours, work from wherever they please, and even take on the most stressful of workdays in their pajamas. It’s a great lifestyle, and because of that, more and more people want to live it.

But there’s a part of the job that freelance writers do NOT want to talk about very often. Something scary and uncomfortable…


In accepting the freedom of the freelancing life, you’re giving up the consistency of typical benefits and retirement plans – a calculated risk for many.

But it doesn’t have to be.

Thankfully, there are many options available for freelance writers who want to retire alongside their office-working peers. Here are three practices to start TODAY if you plan to retire as a freelancer.

1: Open a SEP IRA 

You can breathe a sigh of relief: freelance writing is not the only job without set retirement plans. Small business owners and self-employed people deal with the exact same issue regardless of their industry, from agencies to restaurants and everything in between.

Instead of walking the path to retirement alone, you will approach retirement the same way any other small business owner would.

Typically, this begins with opening a Simplified Employee Pension (SEP) IRA. In a SEP IRA, your investments grow tax-deferred until you retire, and then the distribution is taxed as income.

A SEP IRA is a retirement savings plan to which you make tax-deductible contributions throughout your career as a freelancer. How much you contribute is totally up to you. They’re easy to set up and highly flexible – just like the freelancer lifestyle!

Compared to traditional IRAs, a SEP IRA has a significantly higher annual contribution limit. While a traditional IRA caps at $6,000 of contributions annually, a SEP IRA allows for $58,000, or 25% of compensation, whichever is less.

Before investing in a SEP IRA, you should also know the drawbacks. Since there is no ROTH version, there is no option to pay taxes on contributions now and receive distributions tax-free after you retire. Additionally, any distributions taken out before age 59 ½ are taxed as income, and you’ll pay a 10% penalty.

Despite this, a SEP IRA is a very wise thing to do NOW to help yourself later. Opening one is very easy, too, so contact your favorite IRA account provider and discuss your options.

2: Contribute as MUCH as you can toward your future

Freelancing, especially in the early phases, is scary. Sometimes you don’t know where your next paycheck will come from. You’ll juggle days of “wow, this might actually just work,” with “I just caught a huge break,” and “looks like it’s ramen again tonight.”

Don’t worry. This is a totally normal part of the process. Think of it as onboarding. It’s the freelance rite of passage: enjoy weeks of feast and endure weeks of famine. For extra suspense, you usually won’t know which comes next.

But at some point, enough hard work (and lots of outreach!) will help you reach a place of consistency and confidence. While this is a major victory, it’s also a potential pitfall: if you don’t budget well, you’ll never be able to retire.

Especially after fighting through the stressful gauntlet of reaching that point of stability, it’s tempting to spend the money as fast as you make it, but if you do that, you will NEVER retire. Remember, as a freelance writer, there is no company putting a percentage of your paycheck toward your retirement or taking any other provisions for you. You are on your own.

With that in mind, a good goal is to try to contribute as MUCH as you can toward your future.

You can say, “I’m going to contribute X many dollars toward my SEP IRA each month,” but given the variables at play, is that really reasonable?

Probably not. Christmas shopping or a family vacation might make some months worse than others. Landing a great gig can lead to a great month.

In your line of work, it might be a better approach to save a certain percentage of your income each month since it can vary so much.

Also, while it’s never a bad idea to set a target amount or percentage to save each month, do not hesitate to go over that amount during the bountiful months. You don’t have to “pinch pennies,” per se, but being smart with your savings will grant you an earlier, stress-free retirement.

3: Diversify Your Income 

“Don’t put all your eggs in one basket” might be painfully cliché, but for a freelance writer, diversity is a MAJOR key to financial success.

Consider this: if you have an awesome client that pays that makes up 90% of your paycheck, what happens if something goes south with that client? That is just as big of a loss as being laid off from an office job.

To mitigate this risk, be sure to have a diverse portfolio of clients. Having two or three big clients is great, but try to avoid having one cash cow, so to speak. If you can balance every major client with three or four smaller ones, you’ve built yourself a stable cash flow.

Furthermore, consider other ways to bring in income.

If you can develop a passive income stream, that’s even better. Sharing your expertise is a great way to do this: start a podcast or perhaps even create an online course to teach others about your freelance writing craft. There’s a lot of front-loaded work in both options, but the potential payouts are worth it.

If you ever find that you have more work than you can do, create a business for your service and hire talented freelance writers to help. With this model, you’re still delivering top-quality content to your clients, but you’re also getting a cut of what your freelancers write in exchange for your role in creating the connection.

Finally, to push back against the occasional inconsistency of freelancing, try to sign some clients to a contracted “subscription” service – something like “a year of X-many monthly social posts for a set fee of $1,000/month.” Of course, the content and price are up to you, but a consistent paycheck and solid relationship with clients is a great way to stave off the ebbs and flows of the business.

Having multiple income flows will ensure you are prepared to invest in your future every single month.

Takeaways: Retiring as freelance writers

The path to retiring as a freelancer is not nearly as rocky or uncharted as many fear. Following the practices in this article will help to ensure that you can retire from your career at the same time as your traditional-working peers.

Never forget to prioritize your future, from setting up a SEP IRA as early as possible to saving a percentage of your income each month and diversifying your income in as many ways as possible.

Just because the freestyle life flows with freedom does not mean it can’t be stable, too.

Just remember: it’s up to you.


About the author: 

Jesse Haynes is a novelist with an MBA from the University of Tulsa, so he’s usually either making up stories or helping companies write their own. He’s the founder of Content Ninja LLC, and although he loves to freelance, he doesn’t want to do it forever, so he’s working toward retirement. You can view his nDash profile here.