Develop an exit plan
Freelancers and solopreneurs often dive into their business without a vision of the business's life cycle and without making an exit plan. "This can make it difficult to think about retirement," says Gaito.
An exit plan is a comprehensive strategy that lays out what would become of you and your business if you left it, whether due to retirement, bankruptcy, illness, disability or another reason. The plan may include retirement savings, life or disability insurance, or cashing in other assets, says Gaito.
While traditional businesses usually include recouping the value of their business as part of their exit plan, many freelancers are unaware that their business also may have a value that can be considerably helpful in retirement, says Jonathan Medows, a New York City CPA who works exclusively with freelancers and the self-employed.
Medows says freelancers should focus on building up the value of their business and, "Attract work that creates value, and not necessarily money." In other words, freelancers should concentrate on developing relationships with clients that give repeat business and provide a consistent income stream. A reliable client list will permit freelancers to sell their business and count the worth of their business among the assets that can be used to finance retirement. "You spend a lot of time building up your business. ... Don't just flush it away (when you leave it)," Medows says.