Freelancers often have high job satisfaction nearly 8 in 10 say they prefer it over a traditional office job. But so-called gig workers receive much less support than desk jockeys when it comes to planning for retirement.

Anyone who is self-employed is in the yoyo economy, says Ed Slott, a certified public accountant who specializes in retirement planning. Youre on your own (yoyo) in terms of figuring out and setting up your benefits. Nothing is done for you.

Alas, most gig workers are not nailing the job of being their own retirement plan sponsor. Less than 4 in 10 self-employed workers surveyed by financial service firm Aegon report that they are habitual retirement savers.

Granted, its not financially or psychologically easy to siphon off hard-earned income today and tuck it away for four or five decades. But its crucial for young workers to get started early so they can benefit from compound interest.

Heres how to get your own retirement plan up and running:

Create an automatic savings plan. The most important step is to get in the habit of saving, says Catherine Collinson, president of the Transamerica Center for Retirement Studies. The only way to ensure this will happen is to commit to having automatic deposits made into a retirement account from your checking or savings account. And when you have an especially good month, save even more.

Start with a Roth Individual Retirement Account (IRA). You can contribute up to $5,500 this year into an IRA. (Some perspective: thats $106 a week.) If you can manage to pull that off in 2017 and leave the money growing for 40 years at a 7 percent annualized rate, you will have more than $80,000 waiting for you when you eventually retire. Manage to save that much each year for 40 years and you will have more than $1 million.

There are two types of basic IRAs: A Traditional IRA and a Roth IRA. The Roth IRA is your best option as it entitles you to tax-free withdrawals in retirement. Individuals with income below $118,000 and married couples filing a joint return with less than $186,000 can make the full $5,500 contribution this year. Many financial service firms such as Fidelity, Schwab, TD Ameritrade and Vanguard offer a lineup of low cost mutual funds or exchange-traded funds. (See this article for a quick and easy guide to building a diversified portfolio).

Check Out a Solo Roth 401(k) if you can save more than $5,500 a year. Once you are ready to set aside more for retirement you can opt for a SEP-IRA or a Solo 401(k).

You can save in a SEP-IRA (thats short for Simplified Employee Pension Individual Retirement Account) if you are self-employed. A SEP-IRA is akin to a Traditional IRA, in that contributions qualify as a tax deduction in the year you make the contribution. While a regular IRA allows you to save up to $5,500 this year, the contribution limit for a SEP-IRA is $54,000 or 25 percent of your income, whichever is less.

There is no Roth version of a SEP-IRA that allows you to invest after-tax dollars today with the payoff of tax-free income when you retire. (All money withdrawn from a Traditional IRA or a SEP-IRA will be taxed as ordinary income.)

Thats where a Solo 401(k), also known as an Individual 401(k), comes into play. Some brokerages, including E-Trade, TDAmeritrade and Vanguard offer a Solo Roth 401(k) option. The tax treatment is identical to a Roth IRA: you invest after-tax dollars today for the right to make tax-free withdrawals in retirement. There is no income limit to be eligible for a Solo 401(k)-Traditional or Roth version-and you can set aside even more than the $18,000 limit on regular employer-provided 401(k)s.

If you have both a SEP-IRA and a Solo Roth 401(k) you can toggle between them, says Slott. In a year when you have a lot of income, maybe use the SEP-IRA so you can get the tax deduction on your contribution. In a year you earn less and the tax deduction isnt worth as much to you, fund your Solo Roth 401(k).

The rest is here:
The Freelancer's Guide to Saving for Retirement - Barron's