IRA Financial’s Adam Bergman discusses the best cities for self-employed individuals while saving for retirement.
Choosing the best retirement plan is the first step towards financial freedom. Deciding where to work when you are self employed is an important factor. In his latest podcast, Mr. Bergman looks at a recent article from CNBC to discuss the best cities to be self employed. Further, he talks about why the Solo 401(k) is the best option for retirement planning.
About the Study
Neighbors.com conducted a study to show which cities are best for freelancers. They used five different metrics that many gig workers look for when deciding to work for themselves:
- Median rent
- Average internet speed
- Number of coffee shops per capita
- Income taxes
- Ease of getting around
Data was taken from over 150 cities and each metric was weighed equally. Using info from the US Census Bureau, they came up with the best cities to be self employed (and the worst!).
Here are the Top 5 BEST cities for the self-employed:
- Spokane, WA
- Vancouver, WA
- Ft. Lauderdale, FL
- Tempe, AZ
- Scottsdale, AZ
And the 5 WORST:
- Lexington, KY
- Palmdale, CA
- Port St. Lucie, FL
- Jackson, MS
- Memphis, TN
Freelancer friendly cities are growing more and more. So many people, especially the younger generation, are looking for more flexibility. The ability to set your hours, work remotely and decide your pay are all important as well. What even more important, are the retirement options available to the self-employed.
Retirement Options for Self-Employed
Along with the best cities for self-employed individuals, retirement plan options range from good to great. There are two main types of retirement plans: Individual Retirement Accounts (IRAs) and 401(k) plans. For freelancers, the Solo 401(k) is at the top of the list. IRAs, including SEP and SIMPLE, are both good options. They simply don’t compare to the Solo 401(k).
A Solo 401(k) plan offers the self-employed the best way to save for retirement. The plan is specifically for freelancers and anyone who has self-employment income. It’s not much different than any workplace plan. However, it does offer more benefits.
Contributions Limits – For 2019, you can contribute up to $56,000 or $62,000 if you are age 50 or older. This includes contributions both as the employee and the employer. Click here for current contribution limits.
Tax-Free Loan – Unlike an IRA, you can borrow from your Solo 401(k). You can take up to $50,000 or one half of the account value, whichever is less. You can use the loan for any purpose. The best part is the interest is paid back to the 401(k) as you pay off the loan.
Cost Effective – Since there’s no need to set up an LLC, a Solo 401(k) is a very cost-friendly retirement plan. There’s generally nothing to file with the government, until the assets reach $250,000. Annual maintenance fees are very small with IRA Financial.
Investment Options – The best part of a Solo 401(k), compared to a regular plan, are the investment opportunities. Regular 401(k) plans and IRAs are limited to what the provider allows. However, when using a Solo 401(k), there are no limitations on what you may invest in. The most popular alternative assets include real estate, cryptos, precious metals and peer-to-peer lending.
Best Cities to Be Self-Employed – Conclusion
The factors discussed above should be considered when deciding where you want to freelance. The best cities to be self employed are not limited to those mentioned in the survey. If you are thinking about freelancing, do your research to see if your city fits the criteria!