Due Developer Guide
Retirement planning for developers
If you contribute, then you can retire
Save, test, save again
What is a retirement plan for developers?
Taxes made simple
Why choose Due for your retirement fund?
Due gives you control of your retirement. Whether you’re employed and making the most of a 401(k) plan or a freelance developer with only your own savings to fall back on, you should have your own retirement fund. Due gives you an easy, predictable way to put money aside for your future.
Applying for an account is free and takes about two minutes. In less than the time it takes to check your code, your retirement plan can be up and running.
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If you’re a salaried developer and your employer offers a 401(k) plan with matching contributions, you should save enough each month to take advantage of all of those contributions. Contribute less, and you’ll be leaving money with your employer that could be yours. Saving enough to take all the matching contributions should be your baseline.
Freelance developers 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 savings target. If your current savings rate won’t get you there, you’ll need to save more funds each month.
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 developers and for developers who subsidize their income with occasional freelance work. Annuities let developers 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 developer, whether they’re salaried, freelance, or partly self-employed.
Software development is hard work. But it can also be rewarding and satisfying work. If you’re currently employed, you might look forward to a retirement that still allows you to code part-time. You could retire early, take a smaller distribution and supplement your income with occasional development gigs.
The age at which you retire, though, 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 work, if any, you want to do after retirement.
Yes! You’re in charge. We get that software development can be precarious. Freelance developers can find that their income varies from month to month. Employed developers may find themselves shifting jobs frequently and even taking a lower salary in return for better possibilities.
You can reduce your contributions to Due between gigs or jobs and raise them whenever you want. Just make sure that you check your account and stay on track towards your retirement goal.
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, like software developers, tend to save much more but no one saves enough.
Saving for the future means taking control, creating a habit, and sticking to it.