Retirement: A time bomb for the self-employed

Reuters published the article, "As more independent American Go workers, retirement time bomb turns," the review this pension time bomb. He considered the lack of retirement planning and the underfunding of pension plans for the self-employed. As he said: "If you ask independent workers about retirement savings, a shocking number exactly give the same answer:" What retirement savings? "

This is a major problem not only for self -employed, but for the US as a whole. With more and more people without regular employment and the benefits that come with them, the article said that our nation is facing a time bomb retirement

Therefore :.

• 28% of the self-employed were not saving at all, and 40% were only saved from time to time, according to the independent TD Ameritrade holding Corp. and retirement Survey.
• 40 percent of the workforce will be freelancers, entrepreneurs and temporary workers by 2020, according to a study by Intuit.

Although the traditional way of saving for retirement is not designed for independent culture, those working on their own need to take responsibility for their retirement. The article highlights some of the methods available, including:

• For those who have a significant margin each month, an individual retirement account retirement Simplified Employee (SEP-IRA ) may be appropriate. The contribution limits are much higher than for traditional IRA: 20% of income, or $ 52,000 (whichever is less) in 2014. (See IRS
• For those who have less to save, a traditional IRA or a Roth IRA will probably be a good fit. these have annual contribution limits of $ 5.500 (plus an extra $ 1,000 for those over 50).
• for those whose flow cash is erratic, as is often the case with freelancers, then a percentage system may be more appropriate, the allocation of a percentage of the monthly salary at retirement.

the time is of the essence for independent workers to begin saving. According to the article, only a third of all Americans are contributing to 401 (k) s at the moment, and if these workers are not motivated to plan their retirement, the retirement savings system will become even more broken it already is, and programs funded by the government are not the solution.

also keep in mind that life insurance, disability insurance and long term care insurance should be part of the overall plan. If you die before completing your retirement savings goal or become ill and are unable to work, you must always have resources for you and your family to fall back on. Insurance can provide that safety net.