Gig workers and their plans for retirement
Over the last few years, the gig economy has been growing rapidly. Based on recent statistics, over 10 million Americans now work gig jobs. These jobs provide workers with a number of appealing benefits, including flexibility or independence.
However, they also present limitations as a gig worker will not have access to the same benefits as a regular employee. For instance, a gig worker will not be offered a standard retirement plan by its employer (a 401k plan) and therefore will not get that "nudge" to save for retirement. This leads to a higher percentage of gig workers having little to no retirement savings. Indeed, only 16% of gig workers have some type of retirement savings, leaving millions of workers without a fall-back retirement plan. 70% of gig workers admit that they are not prepared to maintain their current lifestyle during retirement and another 20% say they will probably keep picking up gig jobs during their retirement. About 25% of gig workers have saved nothing for retirement and another 21% have less than $1,000, leaving close to half of the gig population highly vulnerable at retirement.
Reasons You Should Plan For Your Retirement
Whatever your job, saving for your retirement should be a top concern. It is even more important for the gig workers, who do not benefit from any contribution or matching from their organizations and have to build their own plan. Here are some key reasons why you should start thinking about your retirement today.
1. You can’t work gigs forever
Gig jobs often require the worker to be more hardworking than regular workers. This is because you often move from place to place to get jobs and each work environment has a different rule from the first. Having to adapt to different work environments frequently can be tasking and make the job even tougher. When age comes, it would definitely be hard for a gig worker to keep up with the same energy he/she had while they were younger. At some point, you would definitely need to stop working gigs hence you need a retirement plan to sustain you when that time comes.
2. The future might present more financial challenges
At the point that you are, it’s quite hard to know what the future might bring. While working, it’s easier to stay financially stable because the money keeps coming and based on how gig jobs work, the more money you need, the harder you work. During retirement, you might have little or no source of income asides what you have saved. If unexpected financial challenges arise, you might find yourself stranded, so it is important to save ahead to prepare for any situation.
3. Pension or social security might not be reliable
Most gig workers do not get a pension, but others tend to rely on the idea of social security for their retirement plan. This is risky because they aren't always reliable. There will definitely be days when you find yourself in a situation where social security doesn't work, and at that point, you might get stranded. Proper retirement planning makes it possible for you to provide for your needs when a pension or social security isn't available.
4. It gives you a chance to rest
After working gigs all your life, old age is the best time to retire and rest. When retirement savings are mentioned, a lot of gig workers believe they can work gigs all their lives. Although this might be possible for a few percents, working hard during old age might increase a person's mortality rate. Saving for retirement provides financial security hence when age starts to tell, you can retire without worry, knowing fully well that you will not be stranded.
5. You won’t be a burden
Often times gig workers have children or loved ones willing to offer financial aid after retirement. Still constantly leaning on your loved ones for money every time might make you become a burden to them. Having a retirement plan will help you cover most of your financial needs yourself.
While it may not seem easy to start and manage your retirement planning, House of Gigs is here to assist you. By understanding you and your retirement goals, House of gigs wants to help you select the most relevant option and be by your side at every step of the way. Start by downloading the House of gigs app.