Taking Care of the Future You: Retirement Options for Creatives

Taking Care of the Future You: Retirement Options for Creatives
Image Detail: Laura S Nova (Fellow in Interdisciplinary Arts '21); "Silver Sirens;" 2017; performance, photo, video; archival pigmented HDR print; 27x40 in; Photo Courtesy of the Artist

Our partners at Brass Taxes help you understand the various paths towards preparing for retirement and taking care of the future you!

Thinking about retirement can be overwhelming. But don’t worry! We’ve gathered expertise on the topic to give you the confidence to start planning for your future from our partners at Brass Taxes, a team of tax preparers who deliver personalized tax guidance for artists and freelancers. 

Here, Brass Taxes’s Rus Garofalo and Eric Stoddard will guide you through the terminology to help you understand what you need to know to get started.

The Two Kinds of Retirement Options

“There are for the most part two kinds of retirement options. Do you want a tax benefit now (pay taxes later), or do you want a tax benefit later (pay taxes now)?” says Garofalo. Freelancers take note: these benefits are related to income tax only, so you should still consider the self-employment tax when looking at your finances.

Garofalo explains that the tax benefit now options are generally 401(k)s, 403(b)s, Traditional IRAs, and Solo 401(k)s. “These are a lot of weird sounding names. But for the most part they usually mean tax benefit now, and that you’ll pay taxes when they’re taken out.” 

The theory behind the tax benefit now option, says Garofalo, is that “Most people in their 30s, 40s, and 50s are earning more per year than they will be in their 70s and 80s. They are avoiding paying taxes on their retirement now, so that they will pay taxes later when they’re earning less and  in a lower tax bracket.”

The tax benefit later (pay taxes now) options typically have the word “Roth” in the name. Think Roth IRA, for example. The advantage to this option is that although you are paying taxes now when putting money towards your retirement, you won’t have to pay any taxes on the money when you claim it.  

The mountains of Kashmir seen through Google maps.
Image Detail: Credit: Suneil Sanzgiri (Finalist in Video/Film ’21), “Letter From Your Far-Off Country,” 2020, 16mm to 2k video

It is important to note that both of these options will not significantly lower your taxes. “If you made $50,000 and put $6,000 in a traditional IRA, it doesn’t lower your taxes by $6,000. It lowers your taxable income by $6,000. You’re now getting taxed on $44,000, which will save you $1,320 in taxes, not $6,000,” says Garofalo.

Something else to consider is that you don’t have to choose one option over the other. “It can depend on what some of your specific goals are, and you can make contributions to more than one if you are wanting to put more money aside,” says Stoddard. “​​My attitude generally is to keep it as simple as possible for as long as you can. Whenever you want to make more contributions than the account you have open, then you should open up one of those additional accounts.”

“In discussing which paths you take, there’s no perfect answer,” says Garofalo. “That’s less of an issue. I would say don’t worry too much about that. Don’t be worried about doing the perfect thing—be worried about doing nothing.”

Don’t be worried about doing the perfect thing—be worried about doing nothing.

-Rus Garofalo

Garofalo also emphasizes that you can change course if you want to! You could go one route, and then a couple of years later decide to make the switch.

How You Invest

Once you’ve chosen your path (or paths!), you’ll next want to consider your investments. 

Garofalo notes that every brokerage (Fidelity, Vanguard, and Betterment are a few examples) has an age-based mutual fund that uses an algorithm to determine investments based on your target retirement year. This sort of fund typically makes more aggressive investments when you’re further from retirement age, and when you’re closer to retirement the fund starts making more conservative investments to better safeguard your money.

There’s also the S&P 500, which is a list of the 500 biggest companies in the U.S. stock market. When you decide to invest this way, your money is spread out across companies. You could also choose to invest in the entire U.S. stock market, meaning every single company in the global stock market. Or, you could decide to invest in individual company stocks, like Apple, Coca-Cola, or other publicly traded companies—which may require more careful monitoring. 

A light, airy, cathedral-like structure installed in a tall industrial space.
Image Detail: David Henderson (Finalist in Craft/Sculpture ’20); “A History of Aviation;” 2010–2017; foam, fiberglass, carbon fiber, aluminum, plywood, dacron, paint; 20’w x 35’l x 25’h (dimensions variable); Photo: Etienne Frossard. This iteration: Smack Mellon; Brooklyn, NY; 2011

In either scenario, you will likely see your investment dollars fluctuate. This is normal over time, and not something to worry too much about, particularly if you are many years out from retirement.

However you invest, it is a personal decision so do what is best for you. Brass Taxes works with clients to help them pick something they’re comfortable with, and you can also work with a brokerage or financial advisor who can suggest what to do.

How to Get Started

Garofalo and Stoddard acknowledge that it can be scary, particularly for freelancers, to save money or feel comfortable saving money for retirement. The most important thing is to just start doing it.

“The best situation,” says Garofalo, is to “automate the habit of investing in your retirement, even if it is $5. And then, as you make more money, you can increase that amount to $100, $200, back to $50, up to $500. But make it monthly and automated, because you don’t want to put yourself in the position of having to do something, an action, to take care of your future over and over and over again.”

The best situation, is to automate the habit of investing in your retirement, even if it is $5. And then, as you make more money, you can increase that amount to $100, $200, back to $50, up to $500.

-Rus Garofalo

Once you decide you want to start investing in your future, you’ll want to consider where you go to invest your money. Garofalo says that there are many similarities between brokerage firms (including similar fees), and recommends not overthinking it. You should go into any potential investment situation with questions about how their fees are structured (flat fee or hourly rate), and whether they charge based on a percentage of the investments that you have.

The third piece of the equation is deciding where to invest your money. As you think about investing, consider: What do you have to invest? How long can it be invested for? And What are your constraints?

If you envision needing access to funds before you reach retirement age, then this may impact where and how much you choose to invest. If you put money into the S&P 500, for example, there are no penalties for taking it out. If you put money into a Roth IRA, there can be a penalty for taking money out prematurely.

An individual is standing at the top of a rock formation, one arm raised with a white scarf flying in the wind behind them. There is a body of water below, and a butte and a mesa in the distance.
Image Detail: A. K. Burns (Fellow in Interdisciplinary Work ’18); video still from ‘A Smeary Spot;’ 2015; 4-channel HD color video installation, 6-channel audio; TRT 53:13 min

Once you have money invested, Garofalo encourages you to check back in on your investments every couple of years to assess. Do you want to stay on the same investment track? Change brokerage firms? You don’t have to spend much time on it in the interim, but it is helpful to look in on things and potentially get help from a professional advisor to help you navigate your options.

Whether you have outside advisement is up to you. Stoddard’s rule of thumb is: “If you are interested and motivated in controlling this part of your life—and I think most everyone has the capability of doing this for themselves and doing it successfully—you can do it on your own. If you don’t have the interest or doing it yourself will prevent you from putting extra money aside or investing at all, then I think those are great reasons to seek out support in a more active, managed way.”

Brass Taxes works primarily and almost exclusively with people who are W-2 and 1999 or just 1099, freelancing, or trying to have a creative career. If you’re interested in working with Brass Taxes, they are offering $50 off for new clients with the code RETIRE50.

About Brass Taxes

Brass Taxes is a team of tax preparers who promise to deliver personalized tax guidance with a focus on transparency and education. In addition to being tax experts, their team comes from a myriad of creative backgrounds, making for a fun and personable appointment with their knowledge of art, music, theater, comedy, fashion, food, literature, film, podcasts, dance, and more.

–Compiled by Amy Aronoff, Senior Communications Officer

These insights were shared as part of “Taking Care of the Future You: Retirement Options for Creatives,” a presentation Brass Taxes gave in June 2023 in partnership with NYFA Learning.

NYFA Learning provides artists, creators, students, and arts administrators with tools, strategies, and advice for building sustainable careers. The professional development arm of NYFA, NYFA Learning collaborates with organizations, academic institutions, and cultural partners to bring programs to a broad range of national and international creative communities.

You can find more articles on arts career topics by visiting the Business of Art section of NYFA’s websiteSign up for NYFA News and receive artist resources and upcoming events straight to your inbox.

Amy Aronoff
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