When you’re a freelancer, it might be tough to see the big picture for your retirement. It might never come, or it might be the next project away. How can you plan for a future when you don’t know what your next project is and what you might work on next?
Thinking about and planning for the future feels like an unnecessary luxury when you’re so busy meeting deadlines, chasing invoices, and making rent payments. One of the most difficult aspects of being self-employed is having to rely solely on your resources. Because of this, there is no Human Resources department to handle things like your pension and no sick pay or paternal/maternal leaves. You’ll have to deal with greater expenses than you would in a regular job, as well as anxiety over how you’ll pay for them. For independent contractors, retiring may be a difficult topic to broach. If you’re self-employed, you’re already at a loss since you don’t have an employer funding your pension fund. You might not even have a regular source of income to begin with to make such payments.
Pension Plan for freelancers:
- Personal Pensions – Even though these plans are referred to as ‘personal,’ your limited business can and should finance them in the majority of situations.The opportunity to reclaim unused pension allowances from prior years has been removed, but in its place, freelancers now have the option to choose a ‘base year’ from the previous five years and invest on the premise that they are earning that wage this year.
- Stakeholder Schemes – Stakeholder pensions are often the least expensive kind of pension option, with some accessible for as little as 0.6 percent per year. They usually have modest minimum payments and are accommodating if you wish to change the amount.
Do you really want to approach retirement age and discover that your income is going to plummet significantly… just as all your pals who have diligently paid into their employer pensions are starting to make respectable money?