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More than a third of U.S. workers are now freelancers, gig workers, contractors or small business owners, and the ranks of the self-employed are predicted to grow to half of the entire workforce by 2027.

But only 55% of self-employed people said they regularly put away money for retirement, according to a 2019 study. Planning for the future can feel out of reach when your paychecks are inconsistent, and you may worry that in a few months you’ll be working a completely different set of jobs. That’s an understandable feeling, says Hayley Dickson, a certified financial planner at Northwestern Mutual in Santa Monica.

“Therefore [self-employed workers] don’t plan and years go by and now they’re 42 and — whoops — they haven’t been saving at all,” she says. In reality, everyone deserves to think about their future and if you’re self-employed, Dickson says, you need to plan even more than someone who works as a company employee, since you don’t have the structure of employee-sponsored retirement vehicles.

Here’s how you can plan for your future, despite how uncertain the present may feel.

Meet yourself where you are

“The first thing is to even see if you can afford to pay for retirement,” says Dominique Broadway, a financial planner and CEO of Finances Demystified in Miami. That’s a common issue she sees among those who come to her for advice. Many people who are working as freelancers or gig workers are making enough to sustain themselves but not more.

Before you start saving for retirement, get your finances in order as best you can. Figure out what your baseline income is each month and what your expenses are; then determine how much you can put aside for emergency savings, a category that’s even more important than retirement savings, Broadway says. Use a high-yield savings account for your emergency fund so your money is easy to access but not sitting completely idle, and aim to save at least three to six months of expenses — or more, if possible.

Pay off credit card and other debt so that once you reach retirement you’re not using your fixed income or savings to deal with rising interest rates.

“Once you figure that out, start to determine how much you can set aside for your future,” Broadway says. The longer you give yourself to save for retirement, the more that money has time to grow.

Get insured

When you work for yourself and get sick or injured, you often can’t take paid days off, and your health care isn’t covered by your employer. Getting good health insurance as well as disability or long-term care insurance is even more crucial since health care costs can rapidly eat up your savings. It's easy to overlook disability insurance. Workers with company benefits usually get basic disability as part of their package, and it's not a product that many folks are used to buying on their own. You can buy disability coverage directly from an insurance company or get a quote from an online broker.

“If you can’t work, you’re going to drain your savings, so it’s so important to have that coverage,” Dickson says.

Many self-employed people buy health insurance through the Affordable Care Act marketplaces. The American Rescue Plan Act of 2021 temporarily added more subsidies for health care plans and expanded eligibility due to the coronavirus pandemic, which is good news for those who rely on or their state exchange. President Joe Biden has proposed to make the changes permanent. A special enrollment period allows families to register for coverage and take advantage of the cheaper premiums through Aug. 15 of this year.

Open a retirement account

Despite not having access to a traditional employer-sponsored 401(k), gig workers and other freelancers have plenty of retirement plans to choose from, from a traditional IRA to a Roth IRA if you’re just getting started saving, or a SEP-IRA (Simplified Employee Pension) or solo-401(k) if you’re looking to put away more money.

It can be tempting to hoard cash if your monthly income varies, but fight that impulse, Dickson says. Because of inflation, cash actually loses value as it sits in your account, she says. “It’s really inefficient.”

For those who are starting their savings journey from zero, a Roth IRA is a good starting point. It allows contributions of up to $6,000 in post-tax dollars in 2021, or $7,000 for folks 50 and over. Unlike with a traditional IRA, you won't owe penalties if you withdraw any Roth IRA contributions before age 59½. While it's best to leave your money alone, gig workers especially can appreciate the flexibility to withdraw some early if faced with a cash crunch.

“If you're nervous about having enough to contribute, set up a separate savings account for retirement contributions and contribute to that throughout the year so you'll make sure you have the funds,” says Brittany Davis, an associate financial planner at Brunch and Budget in Brooklyn.

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