By Tokiso TKay Nthebe
Can You Save for Retirement as a Self-Employed Professional? Absolutely!
An increasing number of Basotho are embracing self-employment and freelancing, particularly as traditional job opportunities remain limited. As the economy recovers post-pandemic, many entrepreneurs are successfully growing their businesses and generating income. However, a common mistake among self-employed individuals is neglecting retirement planning. The reality is that one day, you too will retire—the question is, will you be financially prepared?
This guide provides practical strategies for entrepreneurs and freelancers to plan, save, and secure their financial future in retirement.
Who is consider self-employed or a freelancer?
- A freelancer is someone who earns income from short-term work, contracts, or projects. They are not formally employed by a company or government and often work independently for multiple clients.
- A self-employed person runs their own business, either as a sole proprietor or a registered company, providing goods or services.
Regardless of the structure, both groups face the same challenge: they do not have employer-sponsored retirement benefits, making personal retirement planning essential.
Why should self-employed people plan for retirement?
A common myth among freelancers and business owners is that retirement planning is unnecessary or can wait until later. But just like salaried employees, self-employed professionals will eventually reach retirement age. The key question is whether you will have enough savings to retire comfortably.
To secure your future:
- Separate Business and Personal Finances – Avoid using business revenue for personal expenses.
- Pay Yourself a Salary – Even if it’s small at first, treating yourself as an employee ensures financial discipline.
- Ensure Tax Compliance – Proper financial management helps maximize retirement contributions and tax benefits.
Where can you invest for retirement?
Without an employer-sponsored pension, the responsibility of saving for retirement rests entirely on you. Fortunately, there are several options:
1. Retirement Annuities (RA)
A retirement annuity (RA) is a tax-efficient way to save for retirement. It allows you to make regular contributions from as little as LSL1 000 per month, which grow over time, and you can access the funds from age 55. These are offered by licensed asset management and insurance companies.
2. Investment Portfolios
If you prefer flexibility, you can invest in various financial instruments, such as:
- Unit trusts, also known as collective investment schemes (CIS).
- Government bonds i.e. issued by Central Bank of Lesotho for example.
- Exchange-traded funds (ETFs).
- Endowment policies offered by insurance companies.
These options allow you to build wealth outside of traditional retirement accounts while maintaining liquidity.
3. Property and Alternative Investments
Many entrepreneurs also consider investing in rental property, stocks, or business expansions as part of their retirement strategy. However, it’s crucial to balance risk and liquidity, ensuring you have accessible funds when retirement arrives.
Tip: Consult a financial adviser to tailor an investment strategy that aligns with your goals.
What are the benefits of saving for retirement?
- Tax Savings – Contributions to approved retirement funds are tax-deductible (up to 20% of taxable income in Lesotho), reducing your annual tax liability.
- Flexibility – Retirement annuities often allow you to pause and resume contributions based on business performance.
- Financial Security – Consistent saving ensures you build a sufficient retirement nest egg, providing financial independence in your later years.
Take action today!
Entrepreneurs and freelancers must take retirement planning into their own hands. Start by assessing your current finances, setting a savings goal, and choosing an appropriate investment vehicle. Your future self will thank you for the financial security and peace of mind.
For more tailored retirement solutions, consult a financial adviser or visit TKO Financial Wellness & Advisory at www.tkofinancialwellness.com
Tokiso TKay Nthebe is an author, podcast host, financial coach and lead advisor at TKO Financial Wellness & Advisory who is passionate about financial wellness, education and financial planning. Subscribe to the FREE email newsletter for personal finance content and tips.
