How I Plan for Retirement When I Don’t Get a Regular Paycheck

Discover your options for retirement when you're self-employed.

One of the most difficult things about being self-employed is budgeting money, and the most difficult part of budgeting is planning for the future and retirement. It’s extremely hard to plan for something that you aren’t going to need for another 30 or more years.

I don’t get a paycheck every week, bi-weekly or even monthly. I am primarily a contract worker, so I receive payment from specific tasks. This can vary widely from month to month; so, trying to figure out how much to save is sometimes daunting.

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A little background: I haven’t held a job where I received a regular paycheck in a long time. I have almost always been self-employed. I realized about 10 years ago that if I didn’t start saving for retirement, I would have to rely on the U.S. Social Security system for my income in my older years. In 2018, the average Social Security retirement benefit check is around $1,400, and that doesn’t even pay the rent in most places. And, honestly, who even knows what’s going to happen with Social Security in 30 or more years, when I’m of retirement age.

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I began my retirement savings by setting up a SEP IRA account, which allows me to stash up 20 percent of my income. This is set up as an automatic deduction in my bank account, so I never even see the money, and I’m not tempted to spend it. Out of sight, out of mind. I pay it like a bill every month. At the end of the year, if I haven’t put away the full 20 percent, I add what I can up to the full amount allowed.

I try to save at least $100 per month into my IRA. Did you know that after 30 years, with a conservative 6 percent interest rate, that $100 per month will be a savings of around $100,500? That’s a nice chunk of money toward your retirement.

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Some of the income I receive is passive/residual income, and that goes directly into a long-term savings account. This is another case of out of sight, out of mind. I don’t see the money until my quarterly statements arrive, so I’m not tempted to spend it.

The key to saving for retirement is to plan and budget. Treat your future just like any other bill — and schedule it to pay automatically. The saying is “pay yourself first,” and your retirement is part of paying yourself. If you don’t take care of you (especially when you are self-employed), who will?

Click through to learn 17 clever ways to save more for retirement.

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