Need to know
- Without corporate benefits, self-employed professionals face a major retirement risk, making personal retirement planning a priority.
- Pieter Albertyn from Momentum Savings notes that even small, consistent contributions gain momentum over time.
- Freelancers can partner with a financial adviser to build their own retirement benefit package with a structured savings plan.
Being self-employed offers a level of freedom that many people aspire to. You can set your own hours and build a business around your own ambitions. But with that independence comes a responsibility that many employees don't have to think about: saving for retirement.
When you're focused on growing your business, retirement can easily slip down your list of priorities. You're managing clients, chasing invoices, keeping cash flow and reinvesting in your business. Saving for a future that's decades away can feel like something you'll get to later. Unfortunately, later has a habit of arriving sooner than you think. The key is to make retirement saving part of your financial routine rather than an afterthought.
Globally, the World Bank estimates there are around 154 million registered gig workers, 60 million active gig workers and as many as 435 million people earning income through online gig work. The growth in self-employment means a rising number of freelancers and entrepreneurs risk hitting retirement without enough savings. Without an employer contributing to a retirement fund on your behalf, the responsibility rests with you.
What financial challenges make retirement planning difficult for the self-employed?
As an entrepreneur, freelancer or gig worker, it's easy to overlook your long-term financial wellbeing while you’re working hard to run and grow your business. You may even think you'll simply keep working well into retirement. But working long hours indefinitely isn't always realistic, and life doesn't always go according to plan.
Our research shows that many self-employed South Africans juggle competing financial challenges, including:
- Financial security
- Cash flow and irregular payments
- Lack of medical aid
- Lack of leave benefits
- Access to finance
- Tax planning
- Lack of retirement benefits
Saving for retirement is most effective when it's built into your financial plan from the start. Here are 3 practical strategies to build retirement planning into your financial routine.
1. Make retirement saving part of your business plan
When you're building a business, it's tempting to reinvest every available rand back into it. But don't overlook the value of investing in your future as well. Even a small investment into a retirement fund every month can, with the dynamo of long-term growth, gain a lot of momentum over time.
The earlier you invest, the better, even if the amounts are small. Just like in a business, small efforts can have a huge impact over time. Money needs the baking powder of time to rise to its full potential.
Do you know that a single windfall of R50 000 can grow to almost R1.5 million in 30 years’ time (if it grows at 12% before fees). That is 30 times more than what you had invested.
2. Use your retirement savings to lower your tax bill
Think of retirement saving as a way to save money at a discount. The tax benefits of retirement products such as retirement annuities can blow you away! Government subsidises you to look after yourself one day, and the more you earn, the fatter those ‘subsidies’ become. For anyone working for themselves, it is simply the most efficient way to protect your money and make sure your hard-earned rands go towards your life, not your tax bill.
The process is simple: the more you earn, the more tax you owe- but the more you contribute to your retirement savings, the more of that tax you get to claim back.
3. Build your own retirement benefit package
If you're smart enough to run a business, you already know the Lotto isn't a retirement plan. But you can be just as creative with your savings plans as you are with your business plans.
Here’s how to build your own retirement package:
Lock in long-term growth with structured saving
Direct a portion of your income into a retirement annuity or other retirement savings plans, and automate your monthly contributions to grow your wealth over time. If you use an administration or invoicing platform like HustleNest, consider setting aside a small percentage of every paid invoice to make saving for retirement effortless.
Partner with a financial adviser or money coach
Human expertise helps you see the bigger picture. Independent earners benefit greatly from partnering with a certified financial adviser or money mentor. A professional ensures your personal finances keep pace with your business growth, helping you make strategic moves as you climb the ladder of success.
Your retirement starts with today’s decisions
The world is still getting its act together in drawing up ethical policies on how to treat gig workers, compensating them fairly and on time. While the world continues to adapt to these needs, you don't have to wait for the system to change. By making retirement planning part of your financial strategy today, you can create a stronger financial foundation for the future.
This blog post was adapted from an article seen on Cover Magazine .
Get advice
Build your own retirement benefit package with an Investo Retirement Annuity from Momentum Savings, starting from just R500 a month. Partner with a financial adviser to ensure your retirement savings plan matches your hustle and lifestyle.
About the author
Pieter Albertyn
Head of Product Solutions at Momentum Savings
Pieter is on a personal mission to empower more South Africans to be better prepared for what life throws at them.
He is a qualified actuary with over 20 years of experience spanning across pensions, risk and savings industries, in roles ranging from IT to actuarial valuations, product management and product development. He joined Momentum in 2016 and serves as the Head of Product Solutions for Momentum Investo.
Pieter completed a leadership programme with Duke University in 2021 and has a keen interest in delivering value through innovation.
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