A new study compares the retirement prospects and visions of independent and traditional workers
Workers in the so-called gig economy enjoy a higher degree of independence than their traditional employee counterparts. But even though they’re taking an active role in their finances and retirement plans, they face comparatively uncertain retirement prospects.
In its second annual survey of US workers participating in the gig economy, T. Rowe Price found that 56% of independent workers (excluding those who identified as already retired) are actively saving for retirement. That’s in comparison to 72% of traditional workers who reported doing the same.
The survey includes individuals engaged in temporary, freelance, and contract employment, whether full- or part-time, as well as those who run a business in the gig economy. Separating the survey population by generation, baby boomers were the largest cohort (48%), followed by Generation X (28%) and millennials (24%). Among all the independent workers surveyed, roughly three fourths said they worked in the gig economy by choice rather than out of necessity.
True to their label, the survey found a fierce streak of self-reliance and control among gig economy workers. The majority (75%) said working independently has made them more involved in their finances; that sentiment was more pervasive among millennials (85%) compared with Gen Xers (73%) and baby boomers (71%).
Looking at the different ways they’re involved with their finances, independent workers were most likely to say they are fastidious about checking their accounts regularly (68%) as well as staying on top of their bills (63%). Working hard to have good credit was a more minor priority overall (33%), though it ranked significantly higher among millennials (40%) compared to boomers (29%).
When asked why they choose to work on their own, independent workers mostly cited having a flexible work schedule and being their own boss (60% for both); earning more money was a relatively high priority (52%). Nearly half of all participants (48%) said they were working more than one independent job; the top two reasons for doing so were to maximize earnings (42%) and to pursue multiple interests or passions (36%).
Comparing the retirement-savings solutions available to traditional and independent workers, the survey found that most traditional workers use their employer-sponsored retirement plans (68%), which likely come with automatic savings features, whereas independent workers rely on IRAs (40%).
Still, independent and traditional workers were just about equally likely to feel financially prepared for retirement (49% and 47%, respectively). In addition, just over half of both independent and traditional workers said they envision working part-time or independently in retirement.