To the self employed: How do you manage your retirement?

Discussion in 'Miscellaneous [BG]' started by Lucky Strike, Nov 12, 2012.

  1. Lucky Strike

    Lucky Strike Supporting Member

    Nov 4, 2008
    Upland, California
    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?
  2. Stewie26

    Stewie26 Supporting Member

    You might want say how old you are. If you are 45 your retirement stratagy would be much different than lets say a 25 year old. Also, its been my experience that musicians are probably not the best group of persons for thinking ahead regarding long term financial planning. Most of the ones I know are always worried about paying this months bills.
  3. tycobb73


    Jul 23, 2006
    Grand Rapids MI
    I would say an IRA through Vangaurd. And unlike the previous poster, I would say unless you are already retired you should be in a stock mutual fund. If you are 50 now you will probably live for the next 30 years. If I was going to invest money and needed it to last 30 years I would go stock funds, probably the total market index or something like that.
  4. fdeck

    fdeck Supporting Member Commercial User

    Mar 20, 2004
    Madison WI
    HPF Technology LLC
    Note that I'm not a financial advisor. It goes without saying, but it's worth re-iterating anyway, that the goal of retirement is to build up enough wealth while you're working, to cover your living expenses when you stop working.

    The reason why I mention this, is that there are lots of books and online guides on retirement investment, but in my opinion the most overlooked and important factors are:

    1. Getting in control of your expenses and debts right now, so that you actually have money to put away. Interest on debt is like negative investment.

    2. Avoiding scams.

    3. Taking care of your health.

    4. Coming up with a career plan that is realistic, especially in an industry that tends to be youth oriented. Not wanting to play gigs when you're 60 is probably unrealistic. Most of us, even with steady day jobs and relentless contributions to our retirement savings, can only dream of retiring at 60.
  5. 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!