If you're one of the 2.8 million Canadians who Statistics Canada says are currently self-employed or run a small business, you are likely well aware that along with freedom and independence comes unpredictable cash flow. And that unpredictability can make building a solid retirement plan for your future a bit of a challenge.

“The seasonality of my business, competition and changing consumer tastes mean there’s no guarantee of what I’ll be making in the years before I retire,” explains 44-year-old Meg Wallace, owner of Meg Wallace Photography in Parry Sound, Ontario. “I don’t have a set [retirement] date, mainly because I can’t imagine my life without photography.”

Wallace is not alone. In fact, the average retirement age for self-employed Canadians in 2017 was 68. That’s more than four years older than the average Canadian retiree. Have you passed up the comfort of a steady paycheque to follow your dreams? Waterloo, Ontario–based Sun Life Financial advisor Andrew Wilkin1 shares his top retirement-planning tips with you.

1. Stick to what you’re good at and farm out the rest

For most freelancers, that means taking the time to track down a good accountant, lawyer and financial advisor.

But don’t leave it at that.

“Be sure to talk to your advisors and commit to meeting and reviewing your situation with them on a regular basis,” says Wilkin. “It’s fine if things haven’t changed much in your own life. But what about the Income Tax Act? Or maybe there have been changes to the Canada Pension Plan (CPP) or eligibility for Old Age Security (OAS). These things can have a big impact on your plans, and a good advisory team will keep you up to speed.”

2. Pay yourself first

 “It’s easy when you’re self-employed to want to look after everyone else,” Wilkin says. “Trouble is, sometimes nothing is left over at the end. So reverse that.”

Montrealer Kathe Lieber is a 67-year-old freelance writer, editor and translator – and a big fan of the “pay yourself first” philosophy. She’s even set up an automatic deposit to her high-interest savings account every month.

“You have to do it automatically or it will never happen,” she says.

3. Use RRSPs and TFSAs in tandem

Wilkin sees a tax-free savings account (TFSA) as the perfect tool for freelancers. Why? First, investments held in your TFSA grow tax-free. And second, you can withdraw your cash whenever you want – say, to tide you over in lean years.

However, unlike with registered retirement savings plans (RRSPs), you can’t deduct TFSA contributions on your tax return. This leads to Wilkin’s rule of thumb on how to choose between the two in any given year:

“At incomes of $40,000 a year or less, I’m inclined to steer people toward TFSAs,” he says. “If your income is over $40,000, you may be better served by a combination of the two. Once you’re into six figures, you want to be maximizing your RRSP [contributions] and certainly having some money go into TFSAs.”

That’s because there’s a good chance you’ll be in a lower tax bracket once you do decide to stop working. Further, once you convert your RRSP to a registered retirement income fund (RRIF) or an annuity and start drawing it down, the cash you take out will be taxed as regular income.

4. CPP: Handle with care

As of January 2018, CPP benefits average $691.93 a month for people who have just decided to start collecting at age 65. If you do plan to keep working past that age, the regular payout can add some nice stability to your cash flow. You can begin drawing CPP as early as 60, with a reduced benefit, or as late as 70, with an increased benefit.

You don’t have to stop working to start collecting CPP. But there are a couple of things you need to keep in mind – including how CPP can affect your tax bill.

“It’s nice to wake up on the first of the month knowing you have X amount of dollars coming in,” Wilkin says. “But sometimes people spend the money without making provisions for the fact that CPP is taxable. As a result, the income from their business, along with CPP, may push them into a higher tax bracket.”

Then there’s the question of when to start collecting. If you’re unsure when to take CPP, consulting with an experienced advisor and/or accountant can help you sort out all the details and determine which age will best serve your own situation.

5. Get the right insurance

Finally, insurance is critical for self-employed Canadians, since they don’t get coverage through an employer. Consider personal health insurance for benefits like eyeglasses, dental care and prescription drugs. Disability insurance, meanwhile, can replace part of your income if you lose your ability to work. An advisor can help you determine which type of coverage is right for you.

So what’s the bottom line on retirement planning in the gig economy?

Keep working if you love what you do, but always have a plan.

“One thing that will allow you to be honest about whether you still have the passion is if you’re in a position financially where you could walk away and you still want to do it,” says Wilkin. “Then you’re in it for the right reason.”

1 Andrew Wilkin,* CLU, CH.F.C., CFP, CHS, Sun Life Financial advisor
* Mutual funds offered by Sun Life Financial Investment Services (Canada) Inc.
Sun Life Assurance Company of Canada is a member of the Sun Life Financial group of companies.