A recent study from GOBankingRates says that close to half of Americans expect to retire with no money and have less than $10,000 saved for retirement. For the one in three workers who do “on demand” work—driving for Lyft or Uber or getting odd jobs through apps like TaskRabbit— the retirement savings numbers are even worse. According to Intuit and Emergent Research, on-demand gig workers will total 92 million in the next four years, making up 43% of the workforce by 2021. The New York Post’s recent article, “How to Save For Retirement If You Work in the Gig Economy,” says that 27% of workers, whose gig job is the main source of income, have nothing saved for retirement and 21% have less than $1,000, according to Betterment’s Gig Economy and the Future of Retirement report. The online investment company surveyed 1,000 US gig workers aged 25 and older, half of whom rely on their gig economy job as their primary source of income and half who supplement a full-time job with a side job.
About 70% of full-time “giggers” say they’re unprepared to maintain their current lifestyle during retirement. A total of 20% anticipate that they’ll keep picking up gig work, even after they are supposed to be “retired.” A total of 12% of those with full-time jobs will keep their side-hustle, after they’ve “retired” from their 9-to-5 jobs to make ends meet.
The issue is that most gig workers (61%) are using their side jobs to pay off debt, which stacks up to more than $10,000 for almost half of them. They are not working for or planning for the future. Since so many are self-employed, it’s their responsibility to plan a retirement account, compared to those who work for a company who may have a 401(k) set up for them.
The Betterment report noted that gig workers are tech-savvy when it comes to managing their side jobs, but they’re not using the same technology to take care of their finances. While 59% use a digital platform for work, just 19% use an automated savings tool or app to save money. Can you believe that 42% of them store their cash at home? Those dollars aren’t growing, or even earning compound interest.
If you earn your main income through gig work, here is some financial advice: take the initiative today. Analyze your bank accounts (assets) and debt—credit cards, school loans, auto loans or leases, etc. Set up a Roth IRA (individual retirement account) or a SEP IRA (simplified employee pension) and start funding it. Even if you can only put away a little bit each month, every little bit helps.
Starting to take initiative with your retirement plan now will ease stress that can come when you are trying to enjoy your retirement. Make sure you meet with an estate planning attorney as well to establish what will happen to your assets when you pass as well as get documentation in order that will benefit you in life.
For more information on estate planning topics, visit our website today and schedule a consultation. Giggers, the time is not to plan for your life!
Reference: New York Post (May 18, 2018) “How to save for retirement if you work in the gig economy”