Do you cringe when you hear the word retirement? What does retirement even mean for creatives? Probably not what you think.

Retirement doesn’t mean you stop working. Retirement doesn’t mean you do nothing. If you think retirement doesn’t apply to you, you don’t truly understand it. At least not yet.

What Does Retirement Mean to You?

Age is only a number, a cipher for the records. A man can’t retire his experience. He must use it.
—Bernard Baruch

We’re not talking about the old fashion “work for 40 or 50 years then retire to sit on the porch and drink tea all day.” We’re simply talking about investing money to support you as you get older.

What kind of support?

  • Support to let you help others
  • Support to let you pursue your hobbies full-time
  • Support to let you do what you want

That’s what retirement is all about. Still don’t think retirement applies to you? Let me give you some reasons to really start thinking about this…

3 Reasons to Think About Retirement

Actually, there are more than 3 here, but I have combined them for your reading pleasure. I thought you might like that. You’re welcome. 

1. Keep On Keeping On

If you’re working on a side hustle or hobby, then you probably love what you do. It’s your choice to do it, so it would be weird if you didn’t love it. Finance issues can easily get in the way. If you are saving for retirement, you are preparing yourself to keep doing what you love for life. You don’t want to miss opportunities due to financial instability.

2. Responsibility Meets Realism

You are responsible for yourself and be realistic. You may be able to work until the day you die. You may not. You never know what will happen. Social Security is…well, you probably know…let’s just say don’t count on it. If you don’t invest for your own retirement, somebody else will end up paying for it eventually. It could be your children, family or the government, but either way it’s not their responsibility—it’s yours.

3. Investing Fights Inflation

Inflation rises about 5% or 6% per year on average (at least 3%). That means that your money is worth less and less. Investing can beat inflation for you. Even if you only earn a 5% or 6% return on your investments, you still break even. Otherwise, you are actually losing money.

It’s Easier Than You Think

So how do you get started if you’re a freelancer? You don’t have a pension plan and you likely don’t have a company retirement account. There is a good chance that you don’t even work for a company. That’s okay, it’s easy and this is how you do it…

You have a few options to invest for retirement on your own, but they are all linked to one thing…

How to Do It

You will want to start an Individual Retirement Account (IRA). You can open a Roth IRA or a Traditional IRA. With a Roth IRA, you put in post-taxed money (income that you already paid taxes on), but you pay NO taxes on the earnings you accumulate through investing. With a Traditional IRA, you put it pre-taxed money (income before you pay taxes on it), but you are taxed on your earnings.

As a general rule of thumb, as long as you don’t exceed the annual income limits, you should go for a Roth, since your earnings will usually be more money than the amount you contribute. Sooner is better than later for opening an IRA, because the annual contribution limits are low ($5,500 as of 2014).

There is another option for you if you’re self-employed and it’s called a SEP IRA. The main benefit with a SEP is that the annual contribution is higher. So, if you’re self-employed and you can contribute more than $5,500 to your retirement annually, consider a SEP IRA.

An IRA is just a tax shelter, not an investment. You have to actually put investments in the IRA. Think of an IRA as a cookie jar. Think of the investments as the cookies. Who doesn’t love cookies? The cookie jar shelters the cookies from bugs, dirt, pests, etc…don’t all of those things remind you of taxes? Similarly, an IRA shelters your investments from Uncle Sam. Make sense?

So let’s see what kind of cookies we are talking about here…

What Investments Should You Put in Your IRA?

The easiest and most automated way to do this is simply to invest in index funds. An “index” tracks a certain group of companies. For example, the S&P 500 tracks the 500 largest companies on the NYSE (New York Stock Exchange) and the NASDAQ Stock Exchange.

Have you ever wanted to invest in Apple, Google or Amazon?

Good news! They are all on the S&P 500. So, if you invest in a “S&P 500 Index Fund,” you are investing a small portion into each of the 500 companies.

Final Words

I hope you have a better understanding about what retirement is and what it doesn’t have to be.

Investing for retirement is really just investing to have more money
when you get older.

Retirement doesn’t really have much to do with not working, it’s about giving yourself more options down the road.

Author's Bio: 

Kalen of is passionate about helping you master your finances and maximize your productivity. He defies millennial laws by having no debt and four children. You can get his two ebooks, plus two personal finance classics (yes, all for free) right here.