I am self-employed/freelancing; can I save for retirement?


By TKay Nthebe

An increasing number of Basotho are choosing self-employment or to work on freelance basis, especially with the limited employment prospects in the country. With the economy slowly making a recovery from the COVID-19 pandemic, many are growing and making money. A mistake many self-employed people and freelancers often make however, is not prioritising planning and saving for their futures. The reality is that someday they will also retire.

As we wrap the Leruo retirement series, this week’s article focuses on how people who are self-employed or freelancing can plan and save for retirement.

What is a freelancer and self-employed person?


A freelancer is described as someone who earns money from short-term work. Freelancers are not employed by a company or government and have the flexibility to work on different gigs or projects (Downey, 2022). Someone who is self-employed on the other hand works for themselves, providing goods or services and can operate as a sole proprietor or registered company.

Should freelancers or self-employed plan for retirement?

A myth many freelancers, consultants and self-employed professionals have is that they do not have to plan and save for retirement. Like professionals working in the public and private sector, you will also retire one day. The BIG question however is will you have adequate savings to retire financially secure?

A great starting point would be to manage your business well, avoid spending business money for personal expenses and ensure you are tax complaint. Secondly, it is important to separate your personal and business finances and pay yourself a salary, though it is not always easy initially.

Where can I investment for retirement?

Because you are not a member of an occupational fund, where there is an employer-employee relationship, the responsibility to save for retirement lies with you. There are many non-occupational funds to consider for example, a retirement annuity (RA). You can start saving for retirement via an approved retirement annuity (RA) offered by licensed asset management or insurance companies. An RA allows you to make contributions towards retirement, where you can access the funds at the age of fifty-five (55-years). Alternatively, you can start an investment with an asset management or insurance company, where you make regular contributions to save for retirement. It is however, key to consult a professional for good investment advice.

Are there benefits?

Yes, there are many benefits when saving for your retirement. Firstly, you are allowed tax benefits where up to 20% of your contributions towards an approved retirement fund are tax deductible. Secondly, where you are saving via an RA for example, the contributions are flexible since asset managers can allow you to pause contributions when business is hard and resume when you’ve recovered. Lastly, saving for your own retirement gives you the peace of mind that someday when you do retire, you will have built enough retirement capital to live comfortably. I encourage ALL self-employed people and freelancers to prioritise their retirement, while working hard to build their businesses. For more information, consult a financial adviser or visit www.alliance.co.ls for tailor retirement solutions. Likhomo!