As a freelancer, you have the freedom to work from anywhere you want, which means you can take your work with you on vacation or to any other location. According to UpWork and the Freelancers Union, freelancers are 35 percent of the American workforce, which is expected to grow. And a study by Quantico found that freelancers are more likely to be happier (61 percent vs. 49 percent), have better work-life balance (74 percent vs. 58 percent), and be more productive (5.4 hours vs. 4.5 hours) than those who work traditional jobs.
However, freelancers have one glaring problem when engaging in that career lifestyle. When it comes to healthcare, freelancers are most likely on their own. Unfortunately, the Affordable Care Act (ACA) does not make it easy for freelancers to obtain healthcare. The ACA requires that everyone have health insurance or pay a fine, but it only provides subsidies for people who purchase insurance through their employer. This situation leaves freelancers in a difficult position because they often don’t have access to employer-sponsored health insurance and can’t receive subsidies to help them purchase their health insurance.
To create a stable career, freelancers must ensure they can prepare should an accident, illness, or injury happens to them. Here are a few steps to ensure stability as a freelancer.
Individual Health Insurance Coverage
The most obvious way freelancers obtain healthcare is to purchase an individual health insurance policy. There are a few things to remember when looking for personal health insurance. The first is that not all insurers offer policies to individuals. The second is that, even if they do, the coverage can be costly and might not cover everything you need.
Another option for freelancers is to join a professional association that offers group health insurance plans to its members. For example, the National Association of Realtors provides group health insurance plans to its members through Blue Cross Blue Shield. Joining an association can help you access cheaper rates and better coverage than you would get on your own.
You can also purchase short-term health insurance plans for a limited period. These plans are typically less expensive than traditional health insurance plans but have much more limited coverage. Short-term health insurance plans can be a good option for freelancers who are healthy and don’t need an extensive range.
Emergency Fund
In addition to having health insurance, freelancers should also have an emergency fund. An emergency fund is a savings account that can cover unexpected costs, like a medical bill or a car repair. Freelancers should aim to save enough money in their emergency fund to cover at least three months of living expenses.
An emergency fund will help you cover unexpected costs and avoid going into debt if you have an accident or illness. You can start by saving up to $500 and gradually increasing your savings over time. Freelancers might have to dip into their emergency fund to pay for a doctor’s visit or an unplanned trip to the hospital.
Individual Dental Insurance
Same with healthcare, dental insurance is often tied to an employer. Most dental insurance plans are offered through an employer, so freelancers might not have access to dental coverage. However, there are a few ways freelancers can get dental coverage.
Some freelancers might be able to get dental coverage through their spouse’s or partner’s employer. If your spouse or partner has dental insurance through their job, you might be able to add yourself to their plan as a dependent.
Another option for getting dental coverage is to purchase an individual dental insurance policy. A few insurers offer dental plans to individuals, but they can be expensive. Dental discount plans are another option for getting dental coverage. These plans aren’t insurance, but they provide discounts on dental procedures and services. If it isn’t possible with your income, you can find an affordable dental clinic for dental procedures. However, you must take care of your teeth to ensure you don’t have to visit often.
Retirement Savings
Another way to ensure stability as a freelancer is to save for retirement. When you’re self-employed, you’re responsible for keeping your retirement. There are a few different retirement savings options available to freelancers.
The most common option is a Solo 401(k). A Solo 401(k) is a retirement savings plan available to self-employed people and freelancers. With a Solo 401(k), you can contribute up to $18,000 per year (or $24,000 if you’re over 50).
Another option for retirement savings is a SEP IRA. A SEP IRA is a retirement savings plan available to self-employed and small business owners. A SEP IRA can contribute up to 25 percent of your income (up to a maximum of $54,000).
There are also traditional IRAs and Roth IRAs. Freelancers can open either type of account and make contributions of up to $5,500 per year (or $6,500 if you’re over 50).
Saving for retirement is essential for freelancers because it will help them have a stable income in retirement.
Final Thoughts
You can achieve stability as a freelancer by focusing on your health, having an emergency fund, and saving for retirement. While it takes some effort to achieve stability, it’s worth it for peace of mind.
