Question 1

How much should a designer save each month for their retirement?

Accepted Answer

The best answer is: “as much as possible.” If you’re salaried and have a 401(k) plan with matching contributions, you should contribute enough to take all of those contributions. Freelance designers won’t have matching contributions but they should aim to save enough to be able to live on 4% of their total savings one day with help from Social Security.

Calculate the amount you think you’ll need to live on each year, deduct your expected annual Social Security earnings, and multiply by 25. That’s your target.

Question 2

What retirement funds best suit designers?

Accepted Answer

Retirement funds come in a variety of different forms, with different benefits and different advantages. At Due, we offer annuities, pensions, and 401(k) plans. While 401(k) plans are best used by employers looking for a way to help their employees, there are versions available for self-employed designers and for designers who take work on the side. Annuities let designers swap a monthly contribution or a lump sum for a monthly payment in the future. Pensions give a fixed return.

All of those plans will suit a designer, whether they’re salaried, freelance, or partly self-employed.

Question 3

When should a designer retire?

Accepted Answer

Design work can be rewarding and enjoyable. It might well be something you want to continue doing long after you’ve left your employer and ditched the nine-to-five. You might want to retire early because you plan to sell your designs part-time and supplement a fixed income.

But the age at which you retire will affect the size of your distributions.

Any distributions taken before the age of 59.5, will come with a penalty. Delaying Social Security after the age of 62 adds 8% each year until you start receiving payments at the age of 70. At the age of 70.5, you must start receiving distributions from any pre-tax retirement plans.

The right age for you to retire is up to you. It will depend on how much you want to live on, and how much of your own design work, if any, you want to continue doing after retirement.

Question 4

My design income is variable. Can I adjust my contributions?

Accepted Answer

Yes! You’re in charge. We understand that if you’re taking freelance work or selling your own designs, your income will vary. At Due, you can reduce your contributions if the gigs or sales fall then bump them up again when projects and sales grow. Just make sure that you check your account to stay on track towards your retirement goal.

Question 5

Can I contribute lump sums to my retirement fund?

Accepted Answer

Sure. If you take on a big design job that boosts your income one month, or if you sell a design for a large amount, you can always put some of that money into your Due retirement fund. You’ll defer the taxes and move faster towards your retirement target.

Question 6

Will I be able to keep working as a designer after I’ve retired?

Accepted Answer

If you want to continue designing after you’ve retired, you are of course free to do so. But make sure that you’re in a position to decide whether you want to work and how much you want to work. Your decision should be one you make out of passion and desire, not out of need. Save now. Save regularly. Earn that 3% interest rate. Then decide how much you want to continue designing—or not!

Question 7

Is $300,000 enough to retire in my fifties?

Accepted Answer

Only if you’re going keep designing part-time. You can’t take Social Security until you’re 62, and if you take 4% of your fund in distributions each year, you’ll have an annual income of just $12,000 a year. You’re still going to have to put in a lot of design work each week.

Question 8

Are designers good at saving?

Accepted Answer

No one is good at saving! The average American family has about $40,000 in liquid savings. Between the ages of 55 and 64, those savings rise to $57,200, and reach $67,700 between 65 and 74. People with higher education tend to save much more but designers can struggle depending on the type of designs they produce and the way they work.

Saving for the future means taking control, creating a habit, and sticking to it.

Question 9

Why should I use a retirement fund instead of a savings plan?

Accepted Answer

A savings account at a bank will now barely pay enough to beat inflation. It’s unlikely to pay enough to compound and turn into a pot large enough to pay for your retirement. Contributions to retirement funds are also tax-deferred. You can make your contributions with pre-tax dollars and pay no tax until you retire.

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