60 NOVEMBER / DECEMBER 2022 Retirement Saving in the Gig Economy Encouraging clients who have “side hustles” HUMAN RESOURCES Was your dinner delivered to your front door last night or have you gotten a lift to the airport lately by using one of several app-based companies, such as Uber or Lyft? If so, welcome to the gig economy, where “side hustles” are no longer relegated to the sidelines but can be a way of life for many workers. A gig worker is commonly defined as anyone who earns income outside of the standard employee/employer relationship. They could be a self-employed entrepreneur, a freelancer or a short-term contract worker. The nonstandard work arrangement, or “gig,” might be project-based, intermittent or temporary. Finding gig employment can be done by conventional advertising or word-of-mouth from past clients, but increasingly it is happening through mobile apps. While the gig economy emerged before the COVID-19 pandemic, the financial uncertainty since 2020 appears to be fueling the growth of gig work. According to a 2021 Pew Research Center study, 16% of Americans have earned money from an online gig platform. When the numbers are broken down by age range, individuals in the 18-29 and 30-49 groups are more likely than older generations to have online side hustles. According to the study, % 30% of 18- to 29-year-olds, % 18% of 30- to 49-year-olds, % 13% of 50- to 64-year-olds and % 7% of seniors age 65 and older have earned money through an online gig platform. Of the gig workers who reported earning money on these platforms over the past year, 31% said it was their main job, while 68% reported that they were earning money as side hustles. Six out of 10 respondents said the money they earned through gig work had been important or essential for meeting their basic needs. While gig work offers flexibility, a lack of benefits and inconsistent income can pose a serious challenge for gig workers who wish to save for retirement. Without a steady paycheck and an employer contributing to a 401(k) plan, will they be able to set or to meet longterm savings goals? The challenge is, how do you encourage them to save? First, find out what they need. Gig workers may be more willing to save if they know they can access their money when necessary. Flexibility is important. They may need flexible contributions and the ability to dip into their retirement savings without incurring early distribution penalty taxes. They are tech savvy and want online access to education resources and their own Jodie Norquist, CIP, CHSP Analyst – ERISA Compliance Ascensus Jodie.Norquist@ascensus.com Ascensus is an associate member of the Indiana Bankers Association.
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