Going self-employed can make a positive difference to your lifestyle and earnings, freeing you from the restrictions of regular full-time positions.
With prospects of a better work/life balance and the ability to become your own boss, it’s easy to see why the trend is becoming increasingly popular among professionals.
There’s also the possibility of earning more money, especially as clients will pay large amounts of money for people with the required skills and experience for a job.
However, many self-employed professionals are not properly aware of how they can put money aside for their retirement, which is risking their financial health in the long run. A study from Aegon found that only 15 per cent are very optimistic about having enough retirement money, while 75 per cent don’t regularly put money away for when they finish working.
Contractors have more freedom than full-time workers when it comes to their future retirement, with half of those surveyed saying they were optimistic about when they will finish working.
Some 53 per cent said they would still be working past age 65, but believe there are benefits to this such as more active brains and improved job satisfaction. Just nine per cent of respondents said they expect to never retire.
Aegon believes that, while auto-enrolment was designed to persuade professionals to save more, the pension reforms neglect the self-employed. The group is also concerned that contractors need to pay for the pension contributions of their staff, adding a further burden that freelancers need to learn how to deal with.
Kate Smith, head of pensions at Aegon, said: “Against a backdrop of rapidly increasing numbers of self-employed in the UK, there’s a growing concern that this group is increasingly likely to struggle with inadequate retirement income when they eventually give up working.”
Ms Smith went on to say that self-employed professionals come up against unique challenges in order to save for retirement. These include missing out on employer contributions and dealing with a variable income that makes it tough to forecast their earnings.
She explained that preparing for retirement needs a long-term approach that many contractors are not properly aware of.
Freelancer and contractor accountants can offer a helping hand by advising freelancers on how they can make the most of their career. These specialists are able to provide guidance on how to save their money more effectively while handling many of the necessary admin duties required.