Retirement Saving Tips For Freelancers

There are many benefits to freelancing, from choosing your working hours to only taking on projects that fulfil you. However, one of the downsides is you don’t have a company pension scheme, which means any saving for retirement is completely down to you.

Here are some tips on how to accrue some funds for your twilight years.

  • Set up a private pension

In the UK, when you work for a company, your employer must enrol you into a workplace pension scheme. If you earn more than £520 a month or £120 a week, they have to contribute to the fund, putting in a minimum of three per cent of your income.

At the same time, you have to pay at least five per cent of your wage, totalling an eight per cent contribution per year. For a salary of £30,000, this amounts to £2,400 set up in your pension savings over 12 months.

However, without a workplace pension scheme, it is up to you to open a private pension account yourself. The amount you contribute is entirely up to you, but the more you put in now, the more will be in the pot when you want to retire.

  • Investing

Another option is to invest your money into an asset that will reap rewards in the future. This could be shares in a company, an alternative asset such as fine wine, or a form of cryptocurrency.

There is always risk when it comes to investing, so you might want to divide your funds into some that are more cautious with a lower rate of return, and some that are riskier but offers a higher profit.

  • Property

Alternatively, if you have enough money to put down a deposit for a buy-to-let property, you could use this opportunity to become a landlord. While you might use the rental income to cover the outstanding mortgage for the time being, when this has been paid off, you can then use the rent as a monthly wage in itself.

This is a popular idea for many freelancers, as it provides a regular source of salary, and is also a reliable asset for the future.

Though the housing market can fluctuate, the likelihood is the property will gain value over the course of several years or decades. Therefore, you will make a good amount of money when you sell it, which itself can be used to fund your retirement.

Over the two years alone, properties in the UK have risen by as much as £47,568, increasing by nearly £30,000 since April 2021, according to Halifax House Price Index.

This would be a substantial amount of money to have in the pension pot, which could fund your retirement. This value increase is only over the last couple of years, so it could be significantly more if left for a decade or longer. 

For more advice on how to prepare for retirement, so you can continue to live a comfortable life, get in touch with an accountant for sole traders in Manchester today.