Retirement Planning for Freelancers: Build Wealth Without a 401(k) Match

Freelancers don't get employer 401(k) matches—but that doesn't mean you're at a disadvantage.

In fact, self-employed retirement accounts often allow higher contributions than traditional 401(k)s. The key is understanding your options and maximizing them.

This guide covers everything freelancers need to know about building retirement wealth.

Why Retirement Planning Matters More for Freelancers

No safety net: No employer pension, no matching contributions, no automatic enrollment.

Variable income: Harder to commit to consistent savings without steady paychecks.

SE tax burden: Without tax-advantaged retirement savings, you pay full taxes on all income.

The opportunity: Self-employed retirement accounts allow contributions up to $70,000/year—far exceeding the $23,500 employee 401(k) limit.

Your Retirement Account Options

Solo 401(k)

Best for: Most freelancers (especially those wanting to maximize contributions)

Contribution limits (2026):

• Employee deferral: $23,500 ($31,000 if 50+)
• Employer contribution: 25% of net self-employment income
• Total maximum: $70,000 ($77,500 if 50+)

Key features:

• Roth option available
• Loan provision (up to $50,000)
• Highest contribution limits at moderate income
• Must establish by December 31

SEP IRA

Best for: High earners ($280K+) or those wanting simplicity

Contribution limits (2026):

• 25% of net self-employment income
• Maximum: $70,000

Key features:

• Simplest to set up and administer
• Can establish until tax filing deadline
• No Roth option
• No loan provision

Traditional IRA

Best for: Supplemental savings or low-income years

Contribution limits (2026):

• $7,000 ($8,000 if 50+)
• May be tax-deductible depending on income and plan coverage

Key features:

• Anyone with earned income can contribute
• Deductibility phases out at higher incomes if covered by employer plan
• Can contribute until April 15

Roth IRA

Best for: Those expecting higher tax rates in retirement

Contribution limits (2026):

• $7,000 ($8,000 if 50+)
• Income limits apply

Key features:

• Contributions not deductible now
• Withdrawals tax-free in retirement
• No RMDs during your lifetime
• Income limit: $161,000 single, $240,000 married

SIMPLE IRA

Best for: Freelancers with employees

Contribution limits (2026):

• Employee: $16,500 ($20,000 if 50+)
• Employer: 3% match or 2% non-elective

Key features:

• Must offer to employees if you have any
• Lower contribution limits than Solo 401(k)
• Simpler administration than 401(k)

Choosing the Right Account

Decision Matrix

Contribution Comparison at Different Income Levels

Key insight: Solo 401(k) allows significantly more savings until income exceeds ~$280K.

Model your retirement options →

How Much Should You Save?

The 15-20% Guideline

Financial advisors often recommend saving 15-20% of income for retirement. For freelancers, aim for the higher end since you don't have employer matches.

Income-based targets:

The Tax Benefit Makes It Easier

Retirement contributions reduce your tax bill immediately.

Example: $20,000 contribution at $100,000 income

• Income tax savings (24% bracket): $4,800
• SE tax savings: ~$3,060
• Total first-year savings: $7,860

The $20,000 contribution effectively "costs" only $12,140 in reduced take-home pay.

Tax Benefits of Retirement Savings

Immediate Tax Deduction

Traditional contributions reduce taxable income:

• Lower federal income tax
• Lower state income tax (most states)
• Lower self-employment tax (for SE income)

Tax-Deferred Growth

Investments grow without annual tax drag:

• No taxes on dividends
• No taxes on capital gains
• Compounding accelerates

Future Tax Planning

Withdraw in retirement when potentially in lower bracket:

• Control timing of income
• Manage tax brackets
• Roth conversions strategically

Roth vs. Traditional: Which to Choose?

Choose Traditional If:

• Currently in high tax bracket (32%+)
• Expect lower income in retirement
• Need maximum tax deduction now
• State has high income tax

Choose Roth If:

• Currently in lower tax bracket (22% or below)
• Expect higher income in retirement
• Want tax-free withdrawals
• Believe tax rates will rise

Split Strategy

Many freelancers benefit from both:

• Traditional: Reduces current high-bracket income
• Roth: Provides tax-free income in retirement
• Tax diversification: Flexibility for future

Building a Retirement Strategy

Step 1: Choose Your Account

For most freelancers: Solo 401(k) (offers most flexibility and highest limits)

Step 2: Determine Contribution Amount

Calculate based on:

• Maximum allowed for your income
• Cash flow availability
• Tax reduction goals
• Overall savings targets

Step 3: Set Up Automatic Contributions

Even with variable income, automate:

• Monthly transfer to brokerage
• Percentage of each invoice/payment
• Quarterly contributions matching estimated taxes

Step 4: Choose Investments

Keep it simple:

• Target-date fund (set it and forget it)
• Three-fund portfolio (US stocks, international stocks, bonds)
• Index funds (low fees, broad diversification)

Step 5: Increase Annually

As income grows:

• Increase contribution percentage
• Max out contribution limits
• Add HSA for triple tax benefit

Retirement Planning Timeline

In Your 20s

• Start early (compound growth is powerful)
• Prioritize high-growth investments (stocks)
• Even small contributions matter

In Your 30s

• Increase contribution rates
• Max out accounts if possible
• Begin diversifying (some bonds)

In Your 40s

• Maximize all contribution limits
• Catch-up contributions at 50
• Review asset allocation

In Your 50s

• Catch-up contributions available
• Begin planning withdrawal strategy
• Consider Roth conversions

Common Retirement Planning Mistakes

1. Starting Too Late

Compound growth needs time. Starting at 25 vs. 35 can mean hundreds of thousands more at retirement.

2. Contributing Too Little

Max out tax-advantaged accounts before taxable investing.

3. Not Adjusting for Income Changes

As income grows, increase contributions proportionally.

4. Wrong Account Choice

Solo 401(k) usually beats SEP IRA for income under $280K.

5. Forgetting State Taxes

Retirement contributions reduce state taxes too (in most states).

Frequently Asked Questions

Can I have both a Solo 401(k) and SEP IRA?

Yes, but contribution limits coordinate. The total employer contribution across both can't exceed 25% of income or $70,000. For most people, one account is sufficient.

What if my income varies dramatically?

Contribute when you can. There's no minimum contribution requirement for most accounts. In high-income years, max out. In low-income years, contribute what you can afford.

Should I pay off debt or save for retirement?

Generally, save for retirement if the expected return exceeds your debt interest rate AND you're getting significant tax benefits. High-interest debt (10%+) should usually be paid first.

When can I withdraw without penalty?

Age 59½ for most accounts. Earlier withdrawals face 10% penalty plus taxes (with some exceptions like 72(t) distributions).

Take Control of Your Retirement

Freelancing means taking responsibility for your own retirement—but it also means access to powerful savings vehicles employees don't have.

AlphaTax helps you model retirement contribution strategies and see the immediate tax impact of different scenarios.

Optimize Your Retirement Strategy →