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Saving for Retirement as a Professional Musician

Being a professional musician can mean many different things. You could make your living selling records, touring, playing an instrument, or singing. You may not win a Grammy for your work or end up on the Billboard charts, but it doesn’t make you any less of a professional.

No matter what level you’re on, being a professional musician can be a lot of fun. However, it also comes with several challenges and uphill battles you’ll have to face throughout your career.

One of those challenges includes saving for retirement. You might be able to make a living playing music now, but saving for the future is another story.

Whether music is your primary or only source of income, it’s not impossible to save for retirement. However, the sooner you get started, the better! Let’s take a look at how you can make the most of your income, manage your money, and build the capital you need to lead a comfortable retirement.

Managing Your Money

If you have a consistent, day-to-day job as a musician, setting money aside is easy. You probably don’t have to worry about things like tax penalties or even calculating how much you can afford to save.

However, not every professional musician has that luxury. When you’re concert-hopping or living gig-to-gig, it can be difficult to practice healthy money management.

It’s easier than you might think to manage your money, but it can take some organizational skills. Start by creating a budget for yourself. Look at the income you’re bringing in each month and how you’re spending it. From there, you can come up with ways to “cut back” on your spending habits, both in your personal and professional lives.

For example, as a traveling musician, you might spend a lot of money on gas to get from one gig to another. Think of ways you can save on gas, like preserving your car’s efficiency and optimizing your driving. Choose to bring your own food along rather than stopping at fast-food joints, and keep a separate “road budget” so you don’t end up buying things you don’t need.

In your personal life, you can manage your money and decrease your spending by cutting back on things like subscription services and dining out.

You should be budgeting to save, not just to pay your bills now. Whether you set aside a section of your budget as an emergency fund or specifically dedicate some of your monthly income to savings, it’s easier to manage your money when you have something tangible written down.

Taking Care of Taxes

We touched on tax penalties above, but are you aware that some of your savings could actually be costing you money? Taxation penalties are destructive and can take away some of the hard-earned cash that you’re trying to store away for retirement. If you want to maintain and grow your savings accounts, it’s important to be aware of exemptions. Some of the most common tax-exempt savings accounts include:

401(k)s
IRAs
Roth accounts
FSAs
HSAs

You can still be taxed for things like early withdrawal and minimum distributions. However, if you work with an investor or accountant on setting up an account, they can guide you through the process and help you mitigate penalties.

As a musician, you probably pay your taxes every year. Maybe you even pay quarterly taxes to avoid a large lump sum owed at the end of every fiscal year. The last thing you want is to deal with more taxation when you’re trying to get ahead. In fact, you should be looking into expenditures that you can write off and deduct! Invest your time and money into working with a tax professional that can help to ensure financial stability for your future.

Have a Back-Up Option

Whether you’re gigging every night, you’re a “seasonal” musician, or you rely on record sales and royalties for income, it can be hard when things aren’t consistent. Even if you tend to do well throughout the year, you might find that most of your income is going directly to the here and now, just so you can get by.

One of the best things you can do for yourself is to have a backup option when it comes to your finances. Thankfully, there are a few different ways to approach a backup plan.

One is to invest your money.

You don’t have to have a lot saved up to invest, and your return could be something that sets you up for a comfortable retirement. Some of the best high-yield investments include

Value stock funds
Short-term government bond funds
High-yield savings accounts
Rental housing
Cryptocurrency

If you’re not willing to take a risk with your money through investing, consider using a “side hustle” or part-time job as your backup plan. It might not seem very rock ‘n’ roll to have a side gig doing something more consistent, but it will allow you to live more comfortably now while you live out your dreams, and give you the opportunity to have a nest egg in the future.

Whether you penny-pinch to save your money, invest in the stock market, or find ways to avoid tax penalties, there are plenty of ways to save for retirement as a musician. While it’s okay to focus on the fun you’re having now, it’s crucial to recognize that one day you’ll want to sit back and relax. Consider some of these ideas when it comes to making sure you can do so with comfort and ease.