Finance for Freelancers: Do I Have Enough Saved for Retirement?


Conventional wisdom says you should have at least 10 times your annual income saved at retirement.  Most experts suggest you should plan on retiring at age 70, and delay taking Social Security until then. But you should spend some time to develop a more accurate, personalized projection that takes into account your expenses, savings and ability to generate income. Four basic questions to consider:

How much will I spend each year? Start by considering how much you spend now, and think about what you want in retirement. Will you want to travel, or live a more local life? Will you have family members who might need your help?

How much in savings will I have if I continue the track I’m on now? You can use an online calculator like this one to project where you’ll be at your current levels of saving, and your anticipated date of retirement.

Will my savings be equal to the amount I want to spend over the last 20 or 30 years of my life? Once you have calculated your annual spending, multiply that by the number of years you expect to be retired — say 25, if you expect to live to 95. Then multiply that total by 1.04, 25 times. That multiplier, 1.04, assumes a 4% inflation rate.

What assets could I tap? For most Americans, their home is their biggest asset. If you are willing to sell it or draw equity from it, you can take this into consideration in your retirement plans.

Then, you can calculate how much income you’ll be able to generate past the age when you intend to start drawing on your retirement accounts. But treat this income as gravy; remember that a large number of people have to stop working sooner than they planned because of health issues.

Here are Charley Ellis’ suggested retirement porfolios by age:

Your Back Office ,

The Freedom of Freelancing

As I attended an evening yoga class with one of my daughters last week, the room was filled with a crush of students, many of whom were probably squeezing in a class after work. It was “mat to mat,” as one of my yoga teachers puts its.

I hadn’t been in a class that crowded in a while and, honestly, I felt a bit stressed as I tried to avoid bumping into the student next to me when we spread our arms wide. One of my resolutions last year was to attend a yoga class once a week. I’ve never been able to meditate successfully, so I thought yoga be a good alternative.

Because of the flexibility of my work schedule, I found that–even while juggling raising four kids–I was often able to attend classes in the early morning, a time when I might have been commuting back in my corporate days. Sometimes I have been able to squeeze in a class in the middle of the day, at times when 10 years ago, I would have been sitting in a cubicle. There is always plenty of room to do the vinyasas among the other students–a mix of college students, retirees, parents who are full-time caregivers and work-at-home types like me.

To my great surprise, I’ve gotten hooked. I often go to yoga four or five times a week. It’s had a tremendous impact on my productivity–something that, of course, is very important if you are trying to make a living as a freelancer.

As we start the new year, I’m very grateful that freelancing has allowed me the freedom to live a healthier life, one that sometimes includes downward dogs and shoulder stands at 11 a.m. That’s a gift I may never have had if I had stuck with a corporate lifestyle.

The Lifestyle , ,

6 Tips for Writing Your Family’s Story  

The Alexandria Library asked me to talk about how this story in The Atlantic, about my great-grandfather’s suicide, came about. I gave a small workshop on writing family stories — you can see a few attendees in the picture.

These were the tips I gave out:

1. Find a mystery. Listen to your intuition. The verbal stories that people tell are very often the ones that hold the most meaning, but what is the meaning? If there is a story told every year about the Thanksgiving turkey that burned, is it told because someone was a bad cook, or someone lost their temper that day, or there wasn’t enough food the year before? You need mystery that interests you, otherwise you won’t have the wherewithal to follow through on the research.

2. Look for inconsistencies. It’s the differences between what people say that give you the space for questions. Why did your grandmother see that house in Indiana as dark and foreboding, while your grandfather remembers it fondly? Why does your father call the local minister a scoundrel while your mother gets a look in her eye when she mentions him?

3. Recognize the style in which you want to write. It will determine the kind of research you need. In fiction, you need to be comfortable making things up out of whole cloth and diverging from the story when you want to. Ultimate freedom, ultimate responsibility. In nonfiction, you need to have the research skills and enjoy that kind of work — thumbing through old newspapers and documenting sources.

3. Get comfortable asking people questions and observing other people. Hardly anybody has a story that is important or interesting enough to come out of their own head, unadulterated. What makes any story interesting are the tensions and dynamics between you and others, living or dead, or between the people you are watching, thinking or writing about. Questions help bring out those dFullSizeRenderifferences.

4. Think through the ethics. Who will be hurt? Who will be happy? Are you prepared to be revealing yourself? Are you prepared for what you will find?

5. Make space for yourself. Our most limited commodity is time. Most working writers work in every corner of time available to them. We end up at our computers or notebooks when other people are out enjoying the sunshine. But there is really no substitute for writing, redrafting, editing and polishing. You have to do them all.











The Lifestyle, Uncategorized , , ,

Kissed By A Shark and Lived To Tell the Tale

A few weeks ago, I found myself in Penn Station at 5 a.m. on a Saturday morning, sipping a disgusting coffee, wearing a cream-colored cocktail frock, and carrying my 30-lb computer bag with a red velvet cupcake in a jar peeping out of the top.
It was morning, but it was actually the end of an evening, one that had started at the beginning of the week with a freelancer’s dilemma.

I’d received an invitation to the premier of Shark Tank, a television show that shines a spotlight on startup financing. Because I don’t have television, I had never seen Shark FullSizeRenderTank, but I’d heard about it from friends.

I put off the decision to go for a few days. I was going to have to pay for the trip to New York City on my own, and hope to earn back the money by selling a story somewhere.

When Friday rolled around, I was doing OK on the deadlines. I also had something to wear, which is not always the case. And I’d come up with a plan to do the trip on the cheap.

If I’d been on staff at a magazine or newspaper somewhere, a trip like this would have been a no-brainer: the contacts would be invaluable, and I’d probably pick up some stories about really interesting entrepreneurs. As a freelancer, it’s a trickier question: how do you know when it is worthwhile to spend money traveling for a story? The tab for a trip to New York is almost inescapably $1,000, including train (about $400), taxis (about $100) and hotel (typically $300-$400).

I decided to go for it — but to try and make it back down to Washington on the last train home so that I could keep the cost more in the range of $500. (Sometimes, frugality is a mistake.)

The last and most important factor in my decision to go was that the publicist said it was OK if I brought a friend. I like parties and they are part of my job, but an introvert in a room full of strangers is always better off with a friend at hand.

My friend EJ is especially good at this kind of thing: She’s a tall, friendly New York City lawyer with a lot of funny jokes up her sleeve — and unlike me, she always has something to wear, complete with matching shoes.

She was game. “You are one of the only people I would do this with,” she said. I’m not exactly sure what she meant by that but I took it to mean that I bring out her adventurous steak. EJ was in for this particular adventure partly because her teenage son likes Shark Tank so she wanted to get selfies with the stars.

As usual, the people working the coat check looked askance at my computer bag, which is about 10 years old and weighs about 30 pounds because in addition to my computer it holds a couple of books I am reading, a few notebooks, some pages of a book I’ve been trying to write for a decade and all the other sorts of things a working mother might have, like lipsticks, homework assignments and spare headphones.

It’s a good thing to have a bag that sticks out in its disreputable state, though, because I very often lose the claim ticket for my bag immediately after I drop it off.

After EJ took took her pictures, I chatted with Daymond John. When he heard that I’d come from Washington and planned to take the train home that night, he looked skeptical. “Check the schedule,” he urged practically. “Nah,” I said. I’ve traveled back and forth to New York hundreds of times, and I was sure there was a train leaving at 11 or 12.

As the evening wore on, I had a couple of the signature shark drinks, which had candy sharks swimming at the bottom, and a few nice conversations with entrepreneurs, including the couple that I ended up writing about a few days later in How a Texas Couple Started with $500 and Built a $1 Million Shark Tank Winner.

Kevin O’Leary came over and introduced himself just as I was leaving. I stuck out my hand for him to shake and he turned it over and kissed it, which is how the title for this blog post came about. (Thank you to Canadian entrepreneur and investing expert Randy Cass, who suggested it.)

“He is such a media whore,” John joked.

The party organizers gave us bags of goodies, most of which I donated to a yard sale collecting money for a nonprofit called Huru International, which helps girls in Africa who don’t have money to manage their monthly periods. But I kept the Wicked Good cupcake-in-a-jar for my girls.

We stepped out into the New York night air. We stopped at Pie Face.

I checked the train schedule.

Needless to say, John had been correct: there was no train back to DC.

I crashed on EJ’s couch (thank you EJ), rose at 4 and made my way over to Penn Station, thinking about how many adventures you get have when you’re a freelancer and a journalist and have good friends and thinking about the last time, back in college, I’d gone back home in my clothes the morning after a party. #walkofshame

I wasn’t the only one who’d had an adventure that night: As I walked through Penn Station I noticed about a dozen other women in cocktail dresses, all making their ways back home.

The Lifestyle, Your Back Office , , , ,

Create a Million-Dollar Business

Earlier this year, Reuters reported that corporate profits were at record highs because labor costs growing so slowly. “Corporate profits are their highest ever and wage growth is near its lowest in half a century,” Jamie McGeever wrote in a blog post in January. At that point, wages were growing by only 2% a year.

Now that employment has picked up, wages have increased a bit–but not as much as you would think. The Bureau of Labor Statistics (BLS) found that workers’ productivity is also higher than last year.  The BLS said wages had increased 2.3% in the second quarter.

Given these brutal facts, it’s easy to see why so many corporate workers are unhappy, stressed and afraid to take a vacation. They know the truth: If they don’t keep running on the treadmill so the corporation can hold onto these giant profits, they are at risk of joining the unemployed–and potentially never being able to replace their job at all.

It’s a very fear-based way to live, focused on scarcity. Employees’ underlying anxiety that they will slip out of the middle class gives big employers inordinate control over many people’s daily lives. It allows these companies to underpay loyal team members who are now on call almost 24/7, thanks to the digital era. And at a time when the cost of daily necessities is rising, many people are pinched as a result.

The cost to employees goes beyond the economic. When workers feel forced to say yes to the ever-increasing demands of employers, they must say no to the many other meaningful things they might be doing with their time. They have little chance to recharge themselves or spend time with the people who matter to them. It’s hard to contribute to their communities or devote themselves to other activities that might replenish them or deepen their lives. That can lead to depression, anxiety and constant regret.

But living in fear doesn’t have to be a way of life if you realize you can provide for yourself without a big employer. Many people are pleasantly surprised to discover that running their own business lets them earn a great living without having to run on a hamster wheel or to say no to who they are and what matters to them.

According to Gallup’s research, only five out of 1,000 people have the capability of being a future Richard Branson or Sara Blakely–meaning they have the combination of innate talents and skills to create a business worth $10 million or more.

But many more people do have the ability to create a small business that provides for them and their families–often while working from home. Consider these U.S. Census Bureau statistics on nonemployer businesses, which I reported on for Forbes: 

* 1.7 million one-person nonemployer businesses achieved six figure revenues in 2012 (the most recent year available)

* 513,137 brought in $250,000 to $499,000

* 221,815 generated $500,000 to $999,999

* 29,494 companies generated $1 million to $2.49 million

* 1,900 grossed $2.5 million to $4.99 million

* 386 firms generated $5 million in revenue or more.

Nonemployer businesses are those staffed only by the owners. Many of these are one-man or one-woman shops or run by a couple of partners.

Next time you’re dreading your commute to a 10-hour day at work, it’s worth considering these statistics. What would happen if you reclaimed those 10 hours and instead devoted them to building a business for yourself? Could you take back even two or three hours this week to build a more joyful life for yourself so you can walk away from your job someday in the near future?

If you feel like your job is slowly killing you, it’s worth considering getting off the train you’re taking and catching another one–to a happier, more meaningful life where you’re in charge. You don’t have to hand the keys to your life to a soulless corporation where no one cares if employees are being worked to death. You can choose life: Your own.







Making the Break, Uncategorized

What’s Keeping Your From Living The Life You Want?

Not long ago, I wrote a blog post for a career site where some readers disagreed with my tips on avoiding age discrimination in the workplace.

One commenter looked at my online bio and pointed out that since I was a former editor at Fortune Small Business magazine, I must be unemployed. Her take was: What could I possibly know about careers?

Her post made me smile. Anyone who is around me on a daily basis will tell you I’m more than fully employed. My challenge for the past couple of years has been actually taking time off.

But she’s right. I don’t have a traditional job. I own a thriving freelance writing and editing business.

Her comment reminded me of an attitude that holds a lot of people back from doing the work they love: They think it can only be done in a traditional job someone has created for them. Anything other than that is the equivalent of unemployment.

Perhaps at one time that was true, but in a digital economy, there are many sources of work other than traditional employers. If you still have the mindset that the only form of steady employment is a formal job, then you may be closing of amazing opportunities to use your talents.

When I was making the decision to go freelance or continue on a traditional corporate track, I did a simple analysis: What did I like about my career? And what did I want to get away from? How could I get closer to a lifestyle where I was mostly doing work I loved and leading the lifestyle I wanted, as the mother of three young children at the time.

What I liked was working with a wide variety of interesting people and writing and editing. What I didn’t like was sitting in long meetings or having to work hours that interfered with my family life.

I realized that if I started my own business, I could enjoy all of the best aspects of my career without the downsides. There are tradeoffs. Being able to focus on the work I want to do has meant taking responsibility for my own income stream. I’ve had to tackle what one of my clients calls “administrivia,” like selecting an insurance plan and submitting invoices.  And sometimes I do have to rearrange family time to make the business run smoothly. But now that I have just passed my seven year anniversary as a freelancer and have four children, I have no regrets about going this route.

If you love your work but don’t love your job–or you love your work but can’t find a job in your chosen field–I’d urge you to do a similar analysis. It could be that it’s very possible to do the work you love if you’re willing to take on the responsibility for being your own boss. It’s not easy. But working in a job you loathe or getting sidelined in the economy is a lot more difficult.





Making the Break, Uncategorized ,

Best Pieces of Financial Advice for Freelancers: Part II

Put Aside Your Emotions

For years, I’ve been writing about behavioral economics. Because we are human, we are motivated about 80% of the time by our emotions. Even when we think we’re not being emotional, we probably are — we’ve just successfully constructed a rationale to disguise the emotion even from ourselves. I realized how pernicious this tendency is in a conversation I had with one of the best investment thinkers of all time, and want to talk about it in this, the second of my three-part post on the best pieces of financial advice for freelancers.

I was in the middle of a divorce. I’d convinced myself that I needed to get my ex-husband off the deed of my house.

Just as I was about to launch into the machinations required to refinance as a freelancer (that’s a whole other topic), I talked to Charley Ellis, a revered money manager, the founder of Greenwich Associates and author of What It Takes and Winning the Loser’s Game, among many other accomplishments. I did a little bit of editing work for his latest book, Falling Short, which is coming out later this fall and is about the retirement crisis.

Along with reams of paperwork, refinancing meant I would have to buy my ex out of the house, which was going to cost $70,000.

I told Charley the situation and mentioned how determined I was to do this. “Why?” said Charley. “If you wait until you sell the house, the $70,000 will be worth a lot less.”

“But then he’ll be on the deed,” I said.

“So what? Just pay your mortgage every month,” said Charley. “The mortgage company doesn’t care.”

He was right, of course. Inflation would eat into the value of the $70,000, and 10 years from now, or so, I’ll probably be in a stronger financial position, too.

Thinking rationally about the value of money helped me decide the right course of action, which was not to refinance.

It’s particularly easy as a freelancer to allow money to represent something else emotionally — usually, it’s security. So you might jump for a big contract with income for six months without thinking through how much time it’s going to take you.

It’s also correspondingly easy to see money as a symbol of the corporate world you left behind and to adopt on attitude of “it’ll come from somewhere.” That sometimes leads freelancers to take on high-profile jobs that pay too little or pro-bono jobs.

The first step to managing your money as a freelancer is managing your emotions — and the first step to doing that is recognizing when your emotions and your money are too tied up together. And maybe the easiest way to do that is bounce your thoughts off a friend, because sometimes, the hardest landscapes to know are our own minds.

Growing Your Business , , ,

Three Best Pieces of Financial Advice for Freelancers: Part I

Being a freelancer requires a whole different mindset than being an employee. You can make a living — as Elaine and I have, and as we help people do. But there’s no steady paycheck, and no big benefits package.

We offer plenty of specific financial advice, like how much you need to have in a cash reserve fund, and how to keep C4xRvRB9kLCwdjudd-xX-gVG_iRhgHxyIQez_Z4Ky3Eyou cash flow, well, flowing. But the most important pieces of financial advice I’ve received have been broader. They helped me reframe my mindset from employee to entrepreneur. I’m going to post them one-two-three in the next three days.

#1: Take Care of Yourself

If you are even considering becoming a freelancer, chances are you know a lot about how to make people happy. You’re confident in your people skills and your talents; to greater and lesser degrees, both will be crucial to winning business. You probably also love what you do, which is motivating you both to leave the crushing realities of a corporate job and to have the freedom to practice your profession the way you think best.

In other words: you have the perfect personality to be a freelancer. But there’s a downside to having a passion about your work and about serving the needs of clients. You might tend to put yourself last. Many freelancers I know do this. Out of a combination of passion and the unsteadiness of the income stream, they become chained to their computers. That’s certainly not the point.

One of the key financial concepts for a freelancer is arranging your budget and your schedule so that you can TAKE TIME OFF. You must be able to decompress. It’s even harder if you have children and a spouse, because they are making demands on you too.

My friend Reba Axelson coalesced this for me. A single mom in the 50s, she was widowed very young. I knew her in her late 80s. When I got my divorce, she took me under her wing, fed me and my girls dinner a few times, and told me how she managed emotionally and financially as a single mom. A native Virginian, she could be very stern when she wanted to be, though always in the most genteel accent you can imagine.

(One of her favorite things to say was, “When God was handing out brains, I was standing behind the door,” which was charming because it was so profoundly and laughably untrue; everyone who met her knew Reba was brilliant).

One day as I was leaving her house, I stood by the door with my hand on the knob — I was headed back to my computer. She had bright blue eyes and she looked at me implacably and said, “You need to take care of yourself.”

She had the authority of being a mother figure who wasn’t my mom, and I felt like I had to listen. When I’m tempted to skip a doctor’s appointment, not take time for exercise or say no to a dinner with friends, I remember Reba’s words.

My work gets a lot better when I take time for myself. That time re-energizing is what gives you the distance and space and ability to think clearly.

The ability to prioritize well is the single most important financial skill for a freelancer: You need to have the emotional and intellectual energy to think clearly, so that you can decide what to work on when and how hard to work on each task.

Growing Your Business , , , ,

Why Freelancing Works For Women

Every once in a while, I’ll get a full-time job offer from a client. These have been well-paying gigs, where I would work for people I know and like. But so far, I’ve always said “No, thanks.”

To some people, this might seem crazy. But when I look at the hours I have available in a day, a traditional job doesn’t fit in right now. I’m very passionate about my work and do earn a full-time living, but I also really like doing things with my family on the weekdays. These bright spots in my day would get stripped away and reserved for the weekends if I commuted into New York City and got home at 8 pm. And, for many reasons–some imposed by society’s expectations and some by ourselves–it just seems harder for women to be able to declare ourselves MIA from the home front during the day so we can focus 100% on work on a punch-clock schedule than it is for men. I know I would be at a competitive disadvantage in the mono-focus world of traditional jobs, with less opportunities for growth than those who don’t have as many responsibilities at home. So  I keep doing what I’m doing.

It turns out many women are freelancing for similar reasons, according to MBO Partners’ new report, the 2014 State of Independence in America. This is a big study of more than 11,000 people.

As the report puts it, “Women tend to see independence as a path leading to fulfilling work that fits into their lifestyle. Men, on the other hand, tend to focus on being their own boss and maximizing their income.”

Consider this:

* 65% of women said flexibility was a key reason they chose to become independent versus 54% of men.

* 20% of women said being able to have time for children is a key reason for their going freelance, vs. 6% of men. For women ages 34 to 49, 26% said having time for children was a key reason.

* 71% of women said flexibility is more important than making  the most money versus 58% of men.

*  76% of women agreed that“Doing something I like is more important than
making the most money” — vs. 69% of men.

* 81% of women responded that they like feeling that they make a difference with their work, compared to 71% of men.

* 48% of  men say they earn more working on their own vs. 40% of women.

* 68% of men  said they always wanted  to be their own boss vs. 61% of women.

* 44% of men said they chose independent work to better control their career, compared to one third of the women.

What’s interesting to me is that the gaps between men and women, while significant, aren’t all that wide. Perhaps that reflects the fact that men today are becoming more involved in life outside of work than earlier generations were–and want many of the same things women now do. Many jobs don’t let people live full lives outside of their cubicles and these independent folks just can’t give up their freedom to do what matters to them.



Growing Your Business, Making the Break, Uncategorized

Freelancing Isn’t “Fringe” Anymore

If you’re surrounded by corporate friends who don’t “get” why anyone would freelance, the independent lifestyle can seem a little lonely at times.

But a new report by MBO Partners suggests that the size of the independent workforce is growing rapidly and more people are embracing self-employment.

In the 2014 State of Independence in America report, MBO Partners, which provides support services to independent workers, gathered data from more than 11,000 workers.

It found that there are now 17.9 “solopreneurs” in the U.S. That’s an increase of 12.5% since 2011. While some would prefer other work arrangements, 76% plan on staying independent in the future. There are also another 12.1 million “side giggers” who work 15 hours a week on a recurring basis to generate extra income.

The top reasons for freelancing didn’t surprise me but they reinforced why the decision to go freelance often works out so well. Respondents listed:

* Control my schedule (63%)

* More flexibility (61%)

* Like being my own boss (57%)

Given the trends toward a more flexible labor force, I suspect we’re going to have a lot more company in the future. Professionals who develop the skills to succeed as freelancers will have many more career options than those who don’t–whether they opt to freelance full-time or on the side.

Making the Break, Uncategorized