Start saving now
There's no question that "going freelance" can be tough on the finances, particularly in the early years. For most freelancers and solopreneurs, it can seem entirely reasonable to put off saving for retirement in favor of covering current costs and reinvesting in the business.
Bad idea, says CFP professional Christopher Kimball of CK Financial Services in Lakewood, Wash. "(Independent workers) always feel that they're swimming upstream and will be able to save once they get things under control, which, of course, never happens," says Kimball.
"People spend almost exactly what they bring home," he says. Even when the business starts generating more money, if saving for retirement isn't made a priority at the outset, that surplus money will likely go toward other things.
Start saving by putting 10 percent of every payment received into a retirement fund. If 10 percent would truly put you in dire straits, then contribute a lower percentage until you can save more. "The real magic in starting small is that it becomes a habit. ... Gradually increasing one's contributions becomes fairly easy to do once the inertia of habit is in play," says Kimball. Moreover, compounding interest helps ensure that even small contributions can eventually reap big rewards.