Nearly 70% of entrepreneurs, contractors and similarly self-employed Americans are not saving on a regular basis, if at all, for their retirement, according to the Self-Employment and Retirement Survey by TD Ameritrade Holding Corporation.

That number is drastically higher than the number of traditionally employed people who do not save regularly (12%) or at all (10%). Most surprisingly, 29% of Generation X and 32% of Generation Y who are self-employed say they currently do not save for retirement.

Research indicates that the number of self-employed jobs in the U.S. have increased more than 14% since 2001. More than 10 million Americans call themselves the boss. Entrepreneurism is an important piece of the country’s economy and has long been viewed as the traditional means to creating wealth. But TD Ameritrade’s survey findings raise the question: are self-employed people betting too much on the future?

Entrepreneurs must balance investing in their business today and investing in their future financial well-being, points out Lule Demmissie, managing director of retirement at TD Ameritrade. “When you’re self-employed the temptation is to think that the business will grow enough that you won’t need to save today,” Demmissie says. “But you don’t know when the next payout is coming and you also don’t want to forfeit the power of tax-free compounded growth in vehicles like an IRA (individual retirement account).” Having a plan in place as well as saving regularly is crucial.

According to the survey, there is a disconnect between what the self-employed are doing to prepare for retirement and where they expect the money to come from in retirement. Some self-employed Americans admit they expect a share of the money they’ll need during retirement to come from profits from their businesses that will continue to run (19%) or from the sale of their businesses (14%), but more expect to rely in part on the money they save before they retire (59%) or from investments in an IRA (38%).

Self-employment carries some significant benefits. Self-employed people are much more satisfied than traditionally employed people with the flexibility of their working schedule, but there are some hurdles.

Unpredictable income is the biggest challenge of being self-employed (61%). Many also find it difficult to afford good health coverage (33%) and save for retirement to the extent that they want to (31%). A majority (83%) of self-employed respondents saving for retirement say they have had to pause or cut back on savings because of various obstacles, compared with 70% of traditionally employed people who have paused at one time or another.

Maintaining a regular schedule of retirement savings with unpredictable income is indeed a challenge, but consistency and automation can make a big difference in reaching retirement goals.

Even if they have only a small amount to contribute regularly, self-employed people should set up automatic savings, according to Demmissie. “First, you never know if you’ll have a windfall every year and you don’t want to waste the tax-free growth opportunity that an IRA provides,” she explains. “Second, we’ve seen correlations between people who get in the habit of automating their investing and arriving in retirement financially prepared. Contributing small amounts regularly is often more fruitful than investing larger sums later on.”

According to a separate survey conducted in November 2012 by TD Ameritrade, Baby Boomers who were financially prepared for retirement were significantly more likely to make regular, and oftentimes automatic, contributions to their retirement accounts compared with those who were financially unprepared for retirement.

Bigger Goals

Most self-employed and traditionally employed people don’t have a specific savings goal in mind when it comes to retirement. But there is a difference about the 30% of self-employed savers who do have a set goal.

Self-employed savers have a median goal of $1 million, compared with the $725,000 goal set by the traditionally employed. Chalk it up to the go-getter entrepreneurial spirit, perhaps.

The majority of self-employed people wouldn’t have it any other way despite the challenges. Fewer than one in 10 self-employed people hope to switch to traditional employment. Many chose the self-employed route because they wanted more freedom (57%), to be the boss (46%) and to work in something they were passionate about (39%). Of note, a quarter of Generation Y became self-employed because they didn’t like, or didn’t expect to like, traditional employment, and a fifth of Baby Boomers chose it because they lost their jobs.

Not knowing when their next paycheck is coming appears also to have an impact on the types of retirement savings accounts the self-employed select. When choosing a retirement plan, self-employed savers look for one that fits their circumstances (42%), is easy to set up (36%) is easy to make contributions to (33%) and allows for irregular contributions (28%).

With many self-employed people not receiving the retirement benefits and guidance a traditional employer can offer, they often turn to traditional savings accounts or money market accounts to save for retirement. While they appear to be aware of the mainstream retirement vehicles like IRAs, more are using traditional savings accounts/money market accounts (47%), than traditional IRAs (33%), Roth IRAs (32%), and SEP IRAs (13%) to save for retirement. Fewer than half (44%) of the self-employed are aware of individual 401(k)s.