Self-Employed Retirement Plans: Secure Your Future Creatively
By Lamar Smith
Planning for retirement is not the first thought of many creatives. As a podcaster and published author with a master’s in sports journalism, I have experienced how it feels to be a fish out of water when it comes to money. However, not until after college did I understand the value of preparing for your financial present, let alone your future.
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Now that I’m in finance, I felt this was an excellent opportunity to share insight on information that can help creatives prepare for retirement and improve their financial situations.
The piece of mind I have gained from financial planning is the reason why I have curated some tips on how creatives like you can plan for retirement. Follow these tips and your thoughts on “Will I ever have enough money to retire?” can turn into limitless creative accomplishments instead.
Common Challenges
A lot of creatives are on two ends of the spectrum. They are either getting an employer retirement plan like a 401 (k) or are independent contractors, so they have no employer retirement plan or any form of retirement plan at all. Both situations can cause problems for different reasons. Some may have employer plans, but that’s their only form of retirement. However, most are independent contractors without employer retirement plans or any type of retirement plan set up.
Also, accumulating long-term savings becomes much more difficult if you are a contractor doing seasonal gigs or having an irregular income. As a result, short-term earnings are their priority.
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Retirement Savings Options for Creatives
Traditional and Roth IRAs
Traditional IRAs: Contributions may be tax-deductible, and earnings grow tax-deferred until withdrawal (typically at retirement age). Withdrawals are taxed as ordinary income.
I would think of a Traditional IRA as a way to lower your taxable income now while saving for retirement. It’s like an artist who delays receiving payment until after a significant exhibition, which is helpful in the short term but requires tax payments later. This account grows tax-free until you start withdrawing, making it an excellent option for those expecting to be in a lower tax bracket in retirement.
Roth IRAs: Contributions are made with after-tax dollars, meaning withdrawals (including earnings) are tax-free in retirement, provided certain conditions are met.
A Roth IRA is like owning the rights to your creative work outright. You pay taxes upfront (like an artist investing in their project), but once it grows, you never have to share the profits with the IRS. This makes it a valuable tool for those who expect to be in a higher tax bracket later or want tax-free income in retirement.
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Annuities
Fixed Annuities: Offer a guaranteed rate of return and predictable payouts in retirement.
Fixed annuities are like signing a licensing deal with guaranteed annual royalties. No matter what happens in the market, your income is set in stone, making it a reliable option for retirees who want financial stability without surprises.
Indexed Annuities: Returns are tied to a stock market index but with downside protection.
Indexed annuities function like a streaming deal where you get a cut of the profits but never risk losing money. Your earnings are linked to market performance, allowing for growth potential, but built-in protections prevent you from losing principal in downturns.
Permanent Life Insurance (Cash Value Policies)
Whole Life & Indexed Universal Life (IUL) Insurance: These policies build cash value over time, which can be accessed via loans or withdrawals. The cash value accumulates tax-deferred without immediate tax implications.
These policies act like valuable intellectual property that gains worth over time. You can borrow against them or withdraw funds, like an artist leveraging royalties from past work. While they provide lifelong coverage, their real advantage is the ability to accumulate wealth while keeping your finances protected.
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SEP IRAs & Solo 401(k)s
SEP IRA (Simplified Employee Pension IRA): Designed for self-employed individuals and small business owners. Contributions are tax-deductible and grow tax-deferred.
A SEP IRA is like a freelancer setting aside large chunks of income for retirement, knowing they won’t be taxed on it until later. It’s perfect for creatives with unpredictable earnings who want a flexible way to save more in good years while reducing their taxable income.
Solo 401(k): Similar to a traditional 401(k) but meant for solo entrepreneurs. Higher contribution limits compared to an IRA.
A Solo 401(k) is like an independent artist running their label. It allows for more considerable savings and tax advantages than traditional IRAs. With employer and employee contributions, it maximizes how much you can invest in your future while controlling your financial security.
Action Steps for Saving
The first step I recommend to anyone wanting to save is to set up automatic contributions from any regular income you receive, especially if it’s from a standard nine-to-five job. I would save at least 10-20% of every paycheck in a liquid short-term savings account. It eliminates the guesswork. One can contribute to several high-yield savings accounts that earn three to four percent, which will help your savings keep up with inflation most years.
Photo of Lamar Smith
The second step I recommend is to get a side hustle. This can be a part-time job, gig work, freelancing or starting your own business. Diversifying income is increasingly important under the current financial climate. If you have a steady or consistent primary source of income I’d save a large portion of your secondary income. If you want to know how to allocate the additional savings, seek the expertise of a financial professional or advisor.
Third, I would work with a professional in finance to get access to their insight and expertise. If they are able to create a full blown financial plan that is a roadmap to how you can save and plan for retirement, even better.
Though it might seem scary at first, saving for retirement doesn’t have to be. Saving for retirement really comes down to some small tweaks and adjustments, especially if you start planning early. The longer you wait, the harder it becomes to prepare for retirement. That’s not to say it’s not impossible, but there is a cost to waiting.
My suggestion is to start small and stay consistent. As your income grows and you get more savvy with different strategies, increase your savings amounts to increase your overall quality of life for your future.
Lamar Smith is a financial professional in Phoenix, AZ. For more financial help, suggestions, or ideas, connect with Lamar Smith on Instagram @jackonovan
Edited by KBR on March 5, 2025
