How I automated my retirement savings as a full-time freelancer

When you work a W-2 job, most employers offer a 401(k) retirement plan, so saving for retirement is fairly easy. But as a full-time freelancer, automating your retirement savings is more difficult.

Since your income is variable, it can be nerve-racking to lock up a certain amount every month. But I knew that if I wanted to reach my $1 million retirement goal, I had to start somewhere.

I opened a SEP IRA account and started saving just $25 a month. Now, I save at least $100 a month and am on my way to saving $200,000 for retirement — and hopefully much more.

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When you have a full-time job, saving for retirement is pretty easy — you go through one round of complicated paperwork, and after that, your money is deducted from your paycheck without any effort on your part. At least, that's how it's worked at the handful of W-2 jobs I've held that offered retirement benefits.

But most of my career has been spent as an independent contractor. There are no employer benefits in these situations, so if you want to save for retirement, you have to do so yourself. Here's how I've made it happen.

Can you even afford to save for retirement？

At one point in my life, I was offered retirement benefits from a specific W-2 employer. Unlike many of my previous employers, contributions were not mandatory. I knew saving for retirement was the right thing to do, but I was also making under $10 an hour, struggling to pay basic bills, and almost never indulging in anything that could be considered even a modest luxury.

I couldn't afford to save for retirement.

Years later, I had worked my way up as an independent contractor and was making enough to be able to stash at least a little bit of money away every month for my golden years, but it took me a long time to get my act together.

I'd open an account and contribute a few dollars to it as I made money, rather than making a steady contribution every month. Because my income is variable, I was uneasy about automating the process. What if my retirement account pulled money from my checking account during a month when my income waned？ How many times would I get hit with overdraft fees？

And what about the retirement accounts I have that won't let me access my money again until I'm retirement age？ Am I really comfortable locking up those assets for so long？

I was afraid of automating my retirement savings, and as a result, my initial contributions to these accounts were sporadic at best. I wasn't getting the most out of my money because I wasn't prioritizing it. For me, I found that inconsistent savings led to consistently lower contributions.

Prioritizing my senior-citizen self

It really hit me when I realized my 20s were over. I stood in an airport bathroom with tears welling up in my eyes — I had just found my first white hairs. I realized that along with hair pigment, I was starting to lose many of the advantages of compound interest with each passing year. If I stashed away just $100/month, I could still have six figures in retirement — but that's a ridiculously modest and inadequate goal. We should all be shooting over the $1 million mark at bare minimum, and even that may not be enough. I needed to start taking action now before any more time was lost.

I started out by opening a SEP IRA (Simplified Employee Pension Individual Retirement Arrangement) through WiseBanyan. Initially, my monthly contributions were extremely small relative to my income: just $25. I could still put in extra funds I came across during the month, but there was a baseline minimum contribution.

Today, my baseline has gone up by 300%. I still contribute extra money when I have it, but my minimum contribution — which is automated — is $100 per month. It's still far less than what I will need in retirement, but it's a lot higher than my baseline savings before. In fact, if I saved only $100/month over the next 35 years, I'd have nearly $200,000 in retirement. Again, not enough to retire on, but still $200,000 more than I would have had otherwise.

I'll continue to increase my minimum automated contribution until I'm maxing out all of my retirement accounts through automation alone.

My hair may be turning white, but my working years aren't over yet. I still have decades to get this right. While it would have been nice to save more in my 20s, nothing can be done about my prior inaction. All I can do is look to the future and feel pretty great about myself today for the effortless self-discipline that comes along with automating my finances.

How much money will you need to retire？ Use Fidelity's retirement calculator to find out: