There are tons of perks to being self-employed, but they come at the cost of certain benefits others take for granted. One thing that people working for a boss have is a 401(k). This does not relieve them of the need to think about saving for retirement, but it does give them a foundation. When self-employed, you need to take all your own steps to save for retirement.

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If you’re not yet saving for retirement, now is the time to start. The longer you put it off, the more at risk your retirement becomes. To help you get going on your retirement savings plan, here are some steps you should take as soon as possible.

Get a Solo 401(k) Plan

As a self-employed individual, you don’t have a company’s 401(k) plan to cover you. That does not, however, mean you cannot be covered by a government-sponsored retirement plan. Before getting into your own retirement fund, let’s talk about your employees (if any). You can use a SIMPLE IRA plan to cover their retirement

The SIMPLE (Savings Incentive Match Plan for Employees) IRA was created by the IRS to provide a simple way for small businesses or self-employed individuals to save for their employees’ or even their own retirement.

To qualify, an employee needs to expect to earn at least $5,000 in the current year. Alternatively, they can have earned this amount in either of the previous two years. A SIMPLE IRA will take a contribution from your business’s earnings every month to save towards a $13,500 maximum yearly contribution.

For yourself, you should consider a Solo 401(k). This is the equivalent of an employer-provided 401(k) and you can contribute up to $57,000 a year. If you are hitting that maximum, you are well on your way to being set for retirement! However, even if you are contributing far less, a Solo 401(k) provides a great start.

Pay yourself

This is actually something you will need to do if you are going to get a Solo 401(k), but you should do it regardless. Many self-employed people use what they earn to cover expenses and to invest further into their business. They end up never taking enough from their income to put anything towards savings.

By paying yourself a fixed amount every month from your earnings, you give yourself the opportunity to save. Instead of all your income going towards the business, you invest in your own future.

Invest

No one should invest their retirement fund in risky ways. On the contrary, you should invest in fixed accounts that will earn money every month, growing what you contribute for the next few years or decades. That said, if you have extra funds available, you can dabble in riskier investments.

Consider buying stocks or investing in bonds. You can even start trading stocks, spending time each day researching which to invest in. Making your savings grow can become a side-hustle that ends up making you more money than your original business.

Find Sources of Passive Income

Passive income can be a great way of earning money that you don’t need for your business expenses or for basic living costs. Finding sources of passive income is far easier today than ever before. If you already own a property with a room you don’t use, you can start earning money by renting it out on Airbnb, for example.

Investing in property is a great way of starting to earn passive income. While the past two years haven’t been great for tenants or landlords, property makes people a lot of money in normal times. You will have to spend time seeing to the needs of your tenants, so it is not an entirely passive endeavor. If you have enough properties, you can hire someone to take care of them for you.

Other sources of passive income include affiliate advertising on a blog or YouTube channel you run, peer-to-peer lending, and even renting out useful household items.

Saving Towards Retirement

Self-employed people should be saving towards retirement. While companies provide a 401(k) to their employees, you will have to take care of your own retirement plan. If you haven’t started saving yet, you should not delay any longer. Your income is entirely dependent on you. You need to make sure that if anything happens, you are in a good position to continue life as normal.