Retirement Planning for a Non-Traditional Career

In today’s dynamic job market, many high-earning professionals are forging their paths in non-traditional careers. While these roles often offer flexibility, autonomy, and significant income potential, they also often come with less structure built towards retirement, and therefore unique retirement planning challenges.

If you’re a consultant, freelancer, entrepreneur, or independent contractor, you may find yourself wondering how to plan to secure your financial future without the structure of a traditional corporate retirement plan.

In this article, the high-net-worth wealth managers from Avidian Wealth Solutions offer tailored retirement planning solutions for high-earning professionals in non-traditional careers, focusing on maximizing savings and managing risks.

Key retirement savings strategies for non-traditional careers

For high-earning professionals in non-traditional careers, retirement planning requires a tailored approach. Here are several strategies for retirement to consider:

1. Maximize tax-advantaged retirement accounts

As a high-earning professional, you have the unique opportunity to save significant amounts for retirement through tax-advantaged accounts. SEP IRAs and Solo 401(k)s are attractive options, allowing you to contribute up to $23,000 in 2024 or up to 25% of your compensation. These higher limits can help you catch up on retirement savings quickly. 

Additionally, backdoor Roth IRA strategies can provide tax-free growth potential, while HSAs offer triple tax advantages for healthcare costs in retirement. If you aren’t sure which are the best retirement plans for you, consult with a retirement income planning advisor.

2. Diversify your income streams

This might involve expanding your service offerings, investing in income-producing real estate or building a portfolio of dividend-paying stocks. For many professionals, developing a scalable business model or creating products based on their expertise can provide more predictable income and potentially increase the value of their business for future sale or succession.

3. Create a robust emergency fund

In non-traditional careers, income can be irregular, making a substantial emergency fund crucial. While the general advice is to have 3-6 months of expenses saved, high-earners in variable income situations should aim for 6-12 months. 

This offers a greater financial cushion during lean periods and can prevent the need to tap into retirement savings prematurely. Strategies like CD laddering can help balance accessibility with higher returns on these funds.

4. Implement risk management strategies

Risk management is particularly important for those without the safety net of traditional employment benefits. One important risk management strategy to consider is insurance. Different types of insurance can offer vital protection, including:

• Disability insurance to protect against income loss
• Key person insurance for business owners
• Umbrella liability policies for additional protection

Additionally, you’ll want to develop an exit strategy for your business or career, such as succession planning or selling your business, to plan for a smooth transition and help secure your financial future when it’s time to step away.

5. Plan for healthcare costs

Healthcare costs can be a significant expense in retirement, especially without employer-sponsored benefits. High-deductible health plans paired with HSAs can offer tax advantages and a way to save for future healthcare costs. Long-term care insurance, while costly, can protect against potentially devastating expenses later in life. It’s also wise to budget for out-of-pocket healthcare costs in your retirement planning, as Medicare doesn’t cover all expenses.

6. Optimize business structure and tax mitigation strategies

Your business structure can significantly impact your taxes, liability protection, and retirement savings options. While an LLC offers simplicity and flexibility, an S-Corporation can potentially reduce self-employment taxes by allowing you to pay yourself a reasonable salary and take additional income as distributions. Your business structure also influences your retirement plan options.

Once your structure is established, focus on tax optimization strategies. This might include maximizing allowable business deductions, timing income and expenses strategically, and leveraging tax credits specific to your industry.

If you aren’t sure which structure is right for you, a retirement tax advisor can help you create a comprehensive strategy that works to optimize your business structure, minimize your tax burden, and maximize your retirement savings potential. 

7. Create a flexible withdrawal strategy

Traditional retirement withdrawal strategies are typically best for those in traditional vs non-traditional jobs. Instead, incorporating a more flexible approach, such as a bucket strategy, can help manage market volatility and irregular income. 

This involves dividing your assets into near-term, medium-term, and long-term buckets, each with appropriate investment strategies. Additionally, tools like annuities or structured withdrawal plans can help create a more predictable income stream in retirement.

Continue reading: Don’t retire: Rewire — Redefining retirement savings strategies

8. Regularly review and adjust your plan

The dynamic nature of non-traditional careers requires regular review and adjustment of your retirement plan. Annual check-ins with a financial advisor can help make sure you’re on track and are taking advantage of all available opportunities. 

You’ll also want to stay informed about changes in tax laws and retirement account regulations, as these can significantly impact your strategies. As your career evolves and your financial situation changes, be prepared to adapt your retirement financial planning accordingly.

Avidian Wealth Solutions offers comprehensive retirement financial advice for those in non-traditional careers.

The strategies outlined above — from maximizing tax-advantaged accounts to diversifying income streams and implementing risk management — form the foundation of a robust retirement plan for high-earning professionals in non-traditional careers.

At Avidian Wealth Solutions, we understand that your unique career path requires an equally unique approach to retirement planning. Our team of financial advisors has extensive experience in crafting personalized strategies that address the specific challenges and opportunities faced by consultants, freelancers, entrepreneurs, and independent contractors.

Because we work out of a boutique family office environment, our holistic approach can go beyond just retirement planning, considering all aspects of your financial life including small business retirement planning, tax optimization, estate planning, and wealth preservation strategies.

Don’t leave your financial future to chance. Schedule a conversation with one of our advisors in Houston, Austin, Sugar Land, or The Woodlands today!

More Helpful Articles by Avidian: 

• Pros and Cons of Donating Retirement Assets
• Preparing for Retirement: the CFO Transition Checklist
• How Does Tax Loss Harvesting Work?
• Required Minimum Distribution Age: When Do RMDs Start?
• What is a Custodial Account?

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