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Why I Haven’t Saved for Retirement in Years and What Am I Doing Instead?

  • I stopped contributing to a 401(k) when I started freelancing and lost my employer match.
  • I find it smarter for me to invest in a taxable brokerage account as it is more flexible.
  • My money hasn’t been locked for decades and I can use it to expand my business if needed.

Confession: I haven’t really contributed to my retirement accounts since 2019. Still, I totally believe in planning retirement ahead. I’ve even worked to help others understand why investing is important. So, if not having my last retirement account contribution seems unthinkable, I’ll explain.

In my 20s, I started saving for retirement with an employer’s 401(k) plan. I was working as a writer and editor and was decades away from retirement, but I knew that the magic of combining could help build my future. The company I work for offered funds that matched a tiered vesting program. Admittedly, it wasn’t the best. But I still made a pre-tax contribution not knowing if I would get the full payment. (Spoiler: I didn’t.)

Fast forward to my next job where I continue to contribute a 401(k) with every paycheck. This employer had a more generous policy with a company match and instant entitlement of up to 5% of the funds. I was getting free money and it was a great motivator. I could see my retirement accounts growing.

I’m going to save you all my work journey, but I’ve finally found an agency that’s worth 5% of my retirement contributions. There, I became fully qualified three years later and even introduced an earlier 401(k) plan to consolidate my investments with lower fees.

In this job, I would regularly contribute the minimum required for matchmaking, sometimes giving more than 10% of my salary. My focus was on saving money, growing my retirement account, and reducing taxable income. But when I decide quit that staff job to find freedom and working for myself, i also left matching funds. And it lost the ability to add more. That’s why I stopped investing in workplace retirement accounts.

Freelancing changed the way I look at retirement planning

At this new stage, I could start contributing to after-tax retirement accounts. However, my perspective on retirement planning had changed.

Look, when I started freelancing, I decided that I needed to be more liquid financially. This helps in speeding up my work and provides me with a cushion in case of an emergency. Because there’s no paid leave for consultants – unless you’ve mastered passive income, but that’s another story – so it is useful to have money on hand.

And while traditional retirement accounts can be helpful for long-term planning, circumstances change, especially when you’re an employee receiving an earned company match. In my case, I certainly didn’t want to face a penalty if I wanted to withdraw money before my retirement age. (Anything else I’m thinking of? While pre-tax retirement accounts can help employees reduce taxable income, business owners like me can reduce taxable income by: deduction of qualifying operating expenses.)

However, my response to being more liquid – and more in control of my finances – was: immortality transfer all the money to a bank savings account and hope for the best. Because inflation is real. And flat money Stacked in a savings account depreciates over time, especially considering it. national average interest rate for savings accounts Only 0.06% according to Bankrate’s May 2022 survey. (Yes, low.)

nowadays, as inflation increasesI have more funds in investments such as index funds, several stocks and cryptocurrencies. And you know? While my retirement accounts from previous staff jobs continue to grow and aren’t too shabby, my after-tax investments aren’t too shabby either. And I am grateful. Because while I continue to deal with economic uncertainty, I can move or withdraw my after-tax funds with no penalty if needed.

happy to adjust as needed

While I appreciate the former me for investing with employer plans, I am now responsible for my own destiny. And I’m glad I controlled my investments in after-tax accounts rather than relying on the potentially limited options of 401(k).

As markets continue to change, I am open to changing my investment strategy. For example, I can think of a bitcoin IRA At one point, because I appreciated the returns that cryptocurrency (which is volatile) can bring. But for now, I’m happy with my current plan.

Today, due to my investments, I no longer have to work as much as I used to. I have more time to see my family and pursue the media and speech projects I love. And I know that I am well positioned for my current situation and my future.

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