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Key Takeaways
- Freelancing doesn’t mean you can’t save for retirement.
- Contributions to a Roth IRA are made using after-tax dollars, and your account grows tax-free.
- SEP IRAs, SIMPLE IRAs, and solo 401(k)s let you save more for retirement than a Roth IRA.
- Save early, maximize your contributions, and speak with a financial advisor.
Approximately 14% of the workforce in the United States works in the gig economy as their primary source of income. While freelancing offers you independence, control, and flexibility, it often lacks the benefits that come with traditional employment, such as a workplace retirement savings plan.
Exploring Retirement Options for Gig Workers
Many freelancers lack employer-sponsored retirement plans because they aren’t traditional employees. They don’t share the employer-employee relationship that full-time workers do. This means people working in the gig economy can’t rely on workplace plans like 401(k)s to fund their retirement.
Forbes reported that 67% of gig workers felt disappointed that they didn’t have access to workplace benefits like retirement plans. As many as 61% of freelancers expect to work beyond the traditional retirement age. More than half of gig workers say they expect to rely on Social Security to fund their retirement. That’s not surprising since over a quarter of those employed in the gig economy say they have no retirement savings.
Even though you may lack traditional options, there are still ways to continue working in the gig economy and save for retirement. Doing so can help you take control of your future while you take advantage of the power of compounding growth.
What Makes a Roth IRA Attractive for Freelancers
Roth IRAs can be a great option for people who work in the gig economy. Your savings use after-tax contributions, which means you’ve already paid taxes on the money you’re saving. The investments in your account grow tax-free, and since your contributions use after-tax dollars, any withdrawals you make are also tax-free as long as you meet the following conditions:
- You reach age 59½
- You’ve held the account for at least five years
Unlike traditional IRAs and 401(k)s, you don’t have to take required minimum distributions (RMDs) from a Roth IRA. This means there’s greater flexibility with Roth IRAs, so you can take out whatever amount you wish as the original account owner. You can withdraw your contributions at any time without incurring any penalties. Or you can leave the account to grow without making any withdrawals until you’re ready.
Your income and tax filing status determine whether you can contribute to a Roth IRA and how much you can contribute. The thresholds for Roth IRA phaseout ranges change and are adjusted annually for inflation by the Internal Revenue Service (IRS).
$7,000
The maximum contribution for a Roth IRA in 2025. You can contribute an additional $1,000 if you’re 50 and older.
How Roth Compares With Other Self-Employed Retirement Accounts
As a freelancer, you have to take retirement planning into your own hands. A Roth IRA is just one option you have available to you. Let’s take a look at some of the other retirement accounts designed for self-employed individuals you can use to build your nest egg:
- SEP IRA: Designed for self-employed people, small business owners, or freelancers, you can save up to 25% of your freelance income up to a certain limit. This limit is set and adjusted annually by the IRS. Your contributions are made using pre-tax dollars, which lowers your taxable income. Your account grows on a tax-deferred basis, and you don’t pay taxes until you take withdrawals. You aren’t obligated to contribute each year.
- SIMPLE IRA: This option is open for self-employed people or small business owners with a few employees. Contribution limits are higher than IRAs but less than traditional 401(k)s. Like other accounts, the IRS adjusts these limits annually for inflation. You can take the employer and employee roles, which means you and your business can contribute. The money grows tax-free until you start taking withdrawals during retirement.
- Solo 401(k): If you’re a freelancer or small business owner, you can have a solo 401(k). It allows you to contribute the most for retirement as a freelancer, the same amount as a 401(k) as an employee, and up to 25% of your net income as the employer. The maximum amount is capped and adjusted annually by the IRS.
Key Eligibility Considerations for Roth Contributions
To contribute to a Roth IRA, you must have earned taxable income. This could be net earnings from self-employment and freelancing, wages, and tips. As noted above, your income and tax filing status determine whether you qualify for a Roth IRA. You also may be limited by how much you can contribute:
| Filing Status | Contribution and Income Range (2025) |
|---|---|
| Single, head of household, or married filing separately (living away from spouse at any time during the year) | Full: Less than $150,000 Partial: $146,000 to $165,000 Ineligible: More than $165,000 |
| Married filing jointly, Surviving spouse | Full: Less than $236,000 Partial: $236,000 to $246,000 Ineligible: More than $246,000 |
| Married, filing separately (living away from spouse at any time during the year) | Full: $0 Partial: Less than $10,000 Ineligible: $10,000 or more |
Maximizing Growth: Starting Early and Strategic Contributions
As a gig worker, it’s important to take control of your finances and devise a retirement plan. Here’s why it’s important for you:
- Start saving early because you don’t have the luxury of an employer match to pad your nest egg.
- Freelancing can be unpredictable, meaning your income may see some ups and downs.
- You have time on your side. Even when you save small amounts, the interest on those amounts earns interest through the power of compounding.
To get the most out of your savings, make sure you maximize your contributions and diversify your investments. You may want to consider enlisting the help of a financial advisor if you need help choosing the right account or investments.
When a Roth IRA Might Not Be the Best Fit
If you’re a freelancer, a Roth IRA may not be the best option in the following situation:
- Your income exceeds the thresholds set by the IRS
- You want to take advantage of a tax deduction to offset a large tax bill from your self-employment income
- You want to save more for retirement (remember, Roth IRA contribution limits are lower than those of other retirement options)
- You want to access your money before you turn 59½, in which case you should consider an emergency fund in a high-yield savings account.
The Bottom Line
A Roth IRA can be a valuable retirement savings tool if you work in the gig economy. It’s a great place to start your retirement plan if you’re in the early stages of your freelance career, as long as you meet the eligibility requirements. But if you’re in a higher tax bracket, you may want to consider other tax-advantaged accounts like SEP IRAs or solo 401(k)s. Speak with a financial professional if you have trouble finding the option that fits with your situation.
