Retirement future is not all doom and gloom for freelancers with the right plan

Many retirement studies and researches have warned that the average American does not save enough to live comfortably during retirement. Most studies, however, focus on the average corporate employee, with an employer-sponsored 401(k) and most of the time, an employer-matching contribution. The group that attracts less focus but faces higher risk are freelancers.

Being a freelancer means flexible work hours, but also unstable income. The lack of a traditional office setting also comes hand in hand with the lack of a retirement plan in place.

This is why many freelancers feel hopeless when it comes to retirement planning. An article on Newsmax describes it as a “brewing financial apocalypse”.

The reality is that if there is any change that can be made, it has to be done by the freelancers themselves. Even though their income may fluctuate, it is them who can decide how much to set aside on a good day. Even though without a traditional 401(k) plan, freelancers need to know that there are other options available to them.

Sense Financial, a plan provider of self-directed retirement accounts, recommends freelancers to look for a retirement plan option that fits their needs. As freelancers, and assuming without any other employee, they are qualified for a Solo 401k plan for self-employed individuals.

The Solo 401k plan offers many flexibility and advantages for its plan participants. A traditional 401(k) may come with employer-matching contributions. A Solo 401(k) comes with a far more powerful allowance: the self-employed individual is seen as both the employer and employee in the business. This means freelancers can make both salary deferral contributions as well as profit sharing contributions.

The combined maximum limit is up to $53,000 a year in 2015. Those who are over 50 years old can contribute an additional catch-up amount of $6,000, bringing the total up to $59,000 a year. The high contribution limit means freelancers can quickly catch up to their savings before it is too late.

Being self-employed, most freelancers know to fend for themselves. When it comes to retirement planning, they also need to step up and take the matters in their own hands. The only way to avoid a financial crisis in the later years is to plan well ahead.

Setting up a Solo 401k plan and making regular contributions to it is a great way to pave the path to a secure retirement funds. As with other qualified retirement plan, there are tax benefits which allow the fund to grow faster. There are also restrictions to early withdrawals, which means the funds are more likely to be able to grow uninterruptedly for many years.

Sense Financial is California's leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. Over the years, they have assisted hundreds of clients to obtain checkbook control over their retirement accounts while providing them with the ability to invest in virtually any investment class, including real estate, private lending, mortgage notes and much more without the need for custodian approval.

To learn more about Solo 401k, please visit sensefinancial.com