Freelance Finance

Personal finance for freelancers is a tricky topic for many reasons, perhaps the most obvious of which is that our work lives—and the erratic payments that often go along with it—look a lot different than most people’s. Saving for retirement is a must for anyone who doesn’t want to spend their golden years panicked about the rising costs of everything from townhouses to toilet paper. Not to mention you’ll likely be too tired and grumpy to work at the same pace you used to and still muster the chutzpah to battle brain-dead accounts payable reps who can never send your checks out on time. We all know how exhausting being self-employed can be during the prime of life; imagine how it will feel when we’re knockin’ on 70 and stumbling around looking for our teeth.

And, though a lot of folks envision retirement as a time when they will kick back and do no work whatsoever, many of us look forward to a time when we can keep doing what we’re doing right now—because we like it—but without the need to earn as much money. This is what retirement should be: doing what you like without the need to make a living from it.

Knowing what you like already puts you ahead. It doesn’t take a charter MENSA member to figure out that if your work IS your life (as it unfortunately is for many), then once you stop working you might feel like you’ve stopped living—or, at the very least, like your life has become a bit of a mystery to you. I’ll resist the urge to go off on a tangent about “purpose” here, primarily because there are already way too many people out there telling you the artist’s way to discovering the purpose-driven color of your parachute soup. But also, because my point is—and I think Muck would agree with me on this one—if you already know what you love to do, there are better things to fret about than how to invest your retirement money.

All of this to say that an article that appeared yesterday on Money.com (Putting Your Retirement on Auto-Pilot) which discusses yet again the benefits of Target Retirement funds. This is not news—Muck and I have talked about this before—but it is worth hammering home. Once you’ve finally begun dilligently setting aside money for retirement, you’ve got to decide how to invest it. Smarty-pants financial advisors will point out that your retirement investments (and other investments, too) need to be allocated judiciously according to where you are in life and how long it will be until you plan to retire. I, personally, would rather have root canal than spend all my time doing the math necessary to balance investment allocations. So why not let someone else do it for you? And here’s the great part: It won’t cost you any extra money or time. In fact, the Target Retirement funds will likely cost you less in the fee department, because such funds tend to be index funds. This means that the stocks, etc. are chosen by a computer following strict guidelines rather than an overpaid, well-fed broker angling for a big year-end bonus.