At the start of 2022, I panicked after realizing I was in my early thirties with only about $4,000 saved for retirement. Once the panic subsided, my solution was to use side hustles to fast-track my retirement savings. Within two years, I was able to use my freelance and 9-to-5 income to grow my retirement savings by over $100,000. Here are some strategies I used to achieve my goal.

1. Draft a retirement plan

Over the years, I hadn’t put much thought into when I wanted to retire or how much I would need. I got started by reading online articles and using a retirement calculator.
Drafting a retirement plan was a cathartic process — it challenged me to think about what lifestyle I want during retirement and how much that could cost. I landed around the $2 million mark, which was initially a shock to my nervous system because I only had around $4,000 saved. I arrived at this number by inputting my ideal retirement age, life expectancy, monthly contribution, monthly budget and other variables into a retirement calculator.
The retirement calculator also helped me break down how much I needed to save monthly to reach my lofty goal.

2. Create an investing strategy

Before hunting for freelance gigs, I wanted to make sure I had an investing strategy in place. It’s easy to spend freelance money before it hits your checking account; I would know because I’ve done it one too many times.
“As a side hustler, your go-to accounts for saving for retirement are the IRA, the Roth IRA, the SEP IRA and a solo 401(k),” says Alleson Tate, a certified financial planner and founder of Avere Wealth Management in Atlanta. These types of accounts can help maximize retirement and health care savings.
To hit my monthly savings goal, I planned to divide my side hustle income into five pots: my emergency savings fund within a high-yield savings account, my 401(k), an IRA, a health savings account and a standard brokerage account. I also planned to max out my allowable contributions to my 401(k), HSA and IRA as my income increased.

3. Budget

Eventually, I found multiple consistent freelance writing gigs by focusing on securing high-paying clients who would provide consistent work over an agreed period of time. I was a regular contributor for some online platforms and also had private clients to whom I provided articles. I used job boards, cold emails and tapped my network. Although most of my freelance income was consistent, some contracts didn’t get renewed. This meant I had to have a solid budget in place and revisit it regularly to stay on top of my saving goals.
Tate suggests using a 50/30/20 budgeting system to manage your side hustle income, which NerdWallet also recommends for primary income. With this method, 50% of take-home income goes to needs, 30% to wants and 20% to savings, debt and investments.
“Everyone’s percentages need to be adjusted according to their own lifestyle and financial priorities,” Tate says. “But that would be a really great starting place.”
I was frequently adjusting my budget allocations. Some months, I was investing too much and didn’t have enough in my emergency fund, while other times, I wasn’t leaving enough for bills. I went overboard with the leisure and self-care bucket a few times, and during months when I had less side income, I had to reduce my savings.

4. Plan for taxes

During my first year of aggressive side hustling, I wanted the instant gratification of seeing my retirement savings grow. I decided to prioritize saving and waited to pay Uncle Sam in one lump sum during tax season. Before making that decision, I should have read the IRS’ fine print about self-employment taxes. Reading that could’ve saved me the penalty I had to pay that year.
The self-employment tax rate is 15.3% for 2023 and 2024.To avoid an underpayment penalty, you’ll generally need to owe under $1,000 in taxes after minusing any withholdings and refundable tax credits. Or, you would need to have paid withholding and estimated tax of either 90% of taxes from the current year or 100% of taxes from the previous year. You can do this by paying the IRS estimated quarterly taxes or by withholding enough taxes from your W2 income.
To help calculate this, Abraham Ziadeh, a CPA and owner of a certified public accounting firm in Pembroke Pines, Florida, suggests using bookkeeping software, an accountant or a CPA.
I chose the W2 route and worked with a financial advisor to calculate how much I need to withhold to avoid another penalty.
I also decided to learn about ways to reduce my self-employment taxes. One strategy my tax advisor suggested was to change my business structure from a single member LLC to an S corporation. If you have consistent income and satisfy the requirements, incorporating your business could help you save on taxes, especially if you choose an S corporation structure, Ziadeh says.
Leveraging a self-employed retirement account was another way to reduce my tax bill. I went with a SEP IRA, since you can contribute a higher amount than you can with a Roth. Tate says SEP IRAs are her preferred accounts since they reduce your taxable income and have a relatively high contribution limit.
That said, it’s important to choose an account that works best for your financial situation.

This column was provided to The Associated Press by the personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice. Elizabeth Ayoola is a writer at NerdWallet. Email: eayoola@nerdwallet.com