Define your idea of retirement
Even if you're decades away from retirement, it's smart to start thinking about how you envision spending your golden years -- and how much that lifestyle might cost.
"Knowing what you want to accomplish in retirement makes saving for it much more palatable," says CFP professional Steve Gaito, director of My Retirement Education Center. He recommends freelancers think deeply about what they want to achieve in retirement, then estimate the total cost of sustaining that lifestyle over a period of 25 to 30 years. With this total, they can then determine how much they'll need to save each year to achieve their retirement goal.
But the traditional concept of retirement -- permanently stopping income-generating work at a set age -- is growing outdated, particularly among independent workers. Some freelancers and solopreneurs are able to create a work/life balance so fulfilling, they don't aim to "retire" in the conventional sense, but plan on enjoying a combination of work and leisure for as long as possible, says financial coach Todd Tresidder, founder of FinancialMentor.com.
If this matches your concept of retirement, "You'll need to build an asset base that's solid enough such that (later on), you don't have to work every month to pay your bills," says Tresidder.