Originally Posted by Lucky Strike
I've been giving thought to various careers, considering the music path as a career I'm wondering what the best way to go about planning for the long term would be. How do any of you who are self employed manage things like finances in the events of old age, disability, retirement...
I'd love to play music my whole life but would also like to have more than a bare-minimum safety net and to be stuck playing gigs in my 60's..
Any ideas on things like IRA's, Annuities or other accounts that help make retirement a reality for the self-employed?
This is a bit of tough love from one who has been gigging since the 70's (full time for the first 20 years of that run). Music, for the most part, and especially for a 'side man' type player, is no longer a valid career choice.
The last thing a young person should do is focus on a career in a declining category that provides no benefits.
Music is a GREAT second job/hobby at this point. That is about it. Again, not saying that some don't still make a living, but a young person just starting out would be a fool to plan on a long career of gigging.
That being said, a SEP ROTH IRA is the way to go for retirment savings for a self employed person with a relatively low income. As a young musician, your tax rate will be very low, so better to pay the taxes on your long term savings now (i.e., ROTH). The SEP version of the ROTH IRA allows you to put the maximum percentage of your income in savings with the minimum of paperwork and complication. It takes about 10 minutes to set one up with Schwab or whoever. You are WAY ahead of the game if you are thinking about this now, at the start of your career, and not at 40 like most workers.
To build on FDecks good post, the road to happiness is built on spending less than you make, and pretty much staying out of debt, avoiding expensive rapidly depreciating assets like expensive cars, and choosing your spouse VERY carefully!