SENIORS AND THE GIG ECONOMY
As seniors near and then reach retirement, sometimes they aren’t really ready to call it quits just yet. This is where part-time jobs, freelance work, and other temporary employment comes in play. Seniors participate in this kind of work—known as the gig economy—for various reasons, like monetary issues and generally trying to keep the brain sharp.
But there are plenty of effects, both positive and negative, that come along with working in the gig economy. First, though, let’s discuss what the gig economy is and dig deeper into why seniors participate in it.
What is the Gig Economy?
The gig economy is a sector of the economy that consists of part-time workers, independent contractors, freelance workers, seasonal employees, and other lines of temporary work. The origins of the gig economy—named after the prevalence of individual “gigs” supplying someone’s income—began in the 1940s with the part-time work that surrounded World War II.
Since then, the options for temporary, non-contractual work have bloomed, particularly in the 21st century with the rise of the Internet and apps that make working from your phone easier than heading to an office several times a week.
As mentioned at the start, workers in the gig economy can take on several types of roles that include:
- Short, independent contractors: Typically these contracts are made with companies, which are hiring workers needed on short-term bases, and max out at two years. Some types of jobs included under this realm that would fit seniors include data analysts and consultants. These workers are often hired through a contracting agency, which finds temporary workers for businesses that need short-term workers. Contractors are a great way for a company to get experienced workers who aren’t looking for long-term growth, which fits most seniors’ wishes.
- Seasonal workers: Sometimes, workers are needed for specific times of the year. These seasonal workers are hired under the pretense that they won’t be needed when the busier season ends. These seasons include the holidays, when retail stores need more employees to assist on the sales floor, and tax season, when more accountants and tax consultants may be needed over the first four to five months of a new year.
- Self-employed (freelance) workers: Self-employed workers don’t have a specific contract with a company, but rather they get paid for the services they complete. This is different from a contractor, who has some form of written agreement for a length of time in which they will be employed. Freelance workers typically can cease their work at just about any time. Examples of this type of job include rideshare drivers (Uber, Lyft), delivery drivers (for apps like Postmates), content writers, technical writers, coders, journalists, and plenty more. This can also include seniors who rent rooms out of their home on apps like Airbnb.
These lines of temporary work should not be confused with the concept of a “temp worker,” or someone who enters a position for a temporary period while the primary holder of the position is away. While these types of positions can be considered a part of the gig economy, this idea of “temps” does not make up the entirety of the gig economy.
As of 2017, more than one-third of the whole workforce in the United States is made up of freelance workers. It’s projected that by 2027, more than half of the workforce will be made up of participants in the gig economy. This speaks to both younger generations’ drive to not stay attributed to one company for their whole lives, and seniors’ willingness (or need) to work into retirement with flexible, unrestrictive jobs.
Why Do Seniors Participate in the Gig Economy?
There are many seniors in the United States, and the numbers are only increasing. As of May 2017, the U.S. Census Bureau reported that just under 48 million seniors—those aged 65 and up—are living in the country and they make up about 15 percent of the total population. That number will blossom to about 78 million by 2035, or 20 percent of the population—less than 20 years from the time this piece publishes. That number easily surpasses 100 million once you factor in people over the age of 55.
This will be a result of the baby boomers (the generation born between 1946 and 1964). People born between those years were part of one of the largest population booms in the history of the country, so it’s understandable why the 65-and-older population will boom a couple generations later.
For generations, the ideal life in the United States would be to retire at age 65 and then live on retirement funds and government benefits like Medicare and Social Security. But as the expected retirement population rises, not everyone can afford to quit working for the rest of their lives. Some also simply just don’t want to, which is where the gig economy comes in for seniors and why so many participate in it.
Let’s take a look at some of the reasons why seniors take the route of the gig economy as they age:
- Lack of money in retirement: As unfortunate as it is, some seniors simply can’t afford to retire. They may not have a pension or retirement account built up for varying reasons. Or they may have had money saved up, but much of it washed away in varying stock market crashes over the years, most recently during the Great Recession of the late 2010s. A 2017 survey revealed that almost one-third of seniors have no emergency savings and 70 percent have less than six months of savings (both partially because of the Great Recession). Seniors are still recovering from that economic downturn, and one way to help combat that is by entering a “soft” retirement. This is when you may no longer have a 40-hour work week, but you don’t completely stop. The gig economy fits that easier schedule.
Lack of government benefits: People over the age of 60 are in an interesting predicament. As they’re getting older, they may be forced out of work or may be physically unable to perform their specific job to the ability they need to. Declaring an early retirement (viewed by the government as a retirement before 65 and after 62, when you can first declare with Social Security) means that you’ll get less money per month than if you retired at 65, 66 or 67. It’s easy to say seniors can just wait until 65 to declare retirement, but as we saw in the previous section, not a lot of seniors have a healthy savings or retirement accounts that can keep them afloat until 65. Having a job in the gig economy can allow seniors to wait a couple more years before declaring retirement, which gives them more money once they officially declare.
This is all combined with the fact that seniors are likely to see less take home pay from Social Security as Medicare premiums increase. As of 2018, Medicare premiums have risen to an all-time high after dipping slightly with the passing of the Affordable Care Act in 2010. There is no reason to believe these premiums will drop, meaning seniors will continue to take home less money per month on their Social Security checks, which on average make up about 40 percent of a senior’s income. The less money coming in on those checks, the less money seniors make per month.
- To stay active and keep a sharp mind: One reason seniors participate in the gig economy is to help stay active, sociable, and keep the mind sharp. There is no one specific age when cognitive diseases, such as the various forms of dementia, may set in, but almost all typically onset after the age of 65. There are also physical diseases, such as heart disease, osteoporosis, and kidney disease, that set in as people age. It’s been shown that isolation and inactivity can aid the advancement of dementia, so not staying active can only be a detriment. Holding a job with social and physical elements, like dog walking and Uber driving, can help seniors’ brains and bodies stay sharp and active, which may help combat these illnesses.
- Flexible work schedule: The biggest perk of the gig economy is that, in most situations, you set the hours. Earning money at your own pace is an attractive gig for seniors, who may have responsibilities and goals as they age, like spending more time with family, increased doctors appointments, and taking care of loved ones. A flexible work schedule allows seniors to work around these needs.
- A desire to keep learning: Just because someone has worked 45 or 50 years in one field doesn’t mean that they should be confined to the same roles in retirement. Retirement is a great time to learn new skills like filing taxes or teaching online classes, both which have the opportunity for seasonal jobs with flexible hours. Learning new trades and skills can also help keep the brain active.
- A desire to keep working: No matter how hard it may be to convince someone otherwise, there are people who age and simply never want to stop working. This reasoning may have underlying psychological reasons that we’ve discussed, like a fear of cognition loss, but there are people who want to always have work at hand. Jobs in the gig economy are a nice option for this type of senior because it allows them to work fewer hours, make money, and have more time to enjoy older age. It never hurts to have some sort of income that isn’t reliant on the government or stock market anyway.
As of 2017, it was reported that seniors are earning about 30 percent of their income from being involved with the gig economy.
Effects of Working in the Gig Economy
The gig economy comes with its benefits and downsides. Because of this, some seniors may be wary about getting a job within the gig economy. You may be seeking a job that provides health insurance until Medicare can cover most of your medical costs, but not all jobs within the gig economy provide this benefit, especially if you’re self-employed.
It’s important to budget out the next few years so you know how much money you’ll pull monthly from retirement and pension accounts, Social Security, and any other type of accounts. This could help clear up how much money you’ll need to make before looking for a gig.
Let’s take a look at some at some of the ways the gig economy can have an effect on your money situation, both positively and negatively:
- Taxes: The tax situation that comes with working in the gig economy can be confusing. Because you are not technically an employee of any one company (in most situations), the company paying you doesn’t take any taxes out of your paycheck. This doesn’t mean you don’t have to pay taxes, though. Uncle Sam will still come knocking the following April wondering where his tax money is.
You should set aside 20 to 30 percent of your paycheck for taxes at the end of the year. That may sound like a large number, but you can always do whatever you want with the money you don’t use to pay taxes! You should factor in this effect of working in the gig economy when it comes to budgeting and estimating how much you have to earn per month. Also keep in mind that self-employed workers need to use a different tax form at the end of the year (and not the standard W-2).
- Health Insurance: A main reason seniors keep working past 65 is the need for health insurance. With Medicare premiums rising and less money in monthly Social Security checks, paired with lower retirement account funds, seniors may not have enough money to cover necessary medical bills as they age. Thus, they need a job with health insurance.
Unfortunately, many self-employed jobs don’t come with health insurance plans. (This may be different for independent contractors, who may get benefits from a contracting company.) This can be a serious issue, especially if you get injured or sick on the job. On the flip side, if your retirement accounts and Social Security checks are up to your standards, and you feel you only need some extra money to help pay for health insurance for you and a family member, maybe a part-time gig that helps you earn some extra cash is perfect.
- Flexibility: It can’t be stressed enough: flexibility is the leading reason why gig economy jobs are so attractive people of all ages, and it can have a positive effect on your money situation and overall lifestyle. Let’s say you have a particularly good month of earning, but you need a break because of the extra work you’re putting in. This flexibility allows you to work a little less the next month so you can rest up without feeling like you’re losing money. The flexibility allows you to not push yourself too hard when you aren’t feeling up to the task.
- Retirement contributions: When it comes to continuing to contribute to your retirement accounts once you leave your old job and start a new one within the gig economy, your options may be limited. With a typical full-time job, retirement options include a 401(k) and various IRAs. Funds are typically taken right from your paycheck and invested by your employer. When you’re self-employed, you may not have enough leftover money to contribute to already-existing retirement accounts. (Like health insurance, independent contractors may be an exception to the rule if a contracting company provides benefits.)
You may need every penny you get from self-employment, and seniors may not need to put any more money into a retirement account. You may just need money from the gig economy to pay bills until you decide to live off retirement. This is where future budgeting can help.
- Potential lack of business: When working in the gig economy, you can experience volatility. Business can be up one week, and down the next. People may be renting rooms in your house every day during the summer and then completely stop in the winter. A study revealed that the two main reasons why people working in the gig economy didn’t put any money into savings was because “I do not generate enough income” and “I don’t get paid on a predictable basis, which makes it hard to set aside money.”
These two reasons are directly related to the inconsistent business that occurs within the gig economy. One slow month of business can turn into two and before you know it, you could be behind on specific parts of your budget.
Before getting a job in the gig economy, you should list out why you’d get a job that requires the attention a self-employed or freelance job does, with the increased attention to taxes and lack of health benefits.
How Seniors Can Get Involved in the Gig Economy
Now that you know all about the gig economy, it’s time to find out how you can get involved. Some types of jobs seniors can get include:
- Become a “host”: There are apps like Airbnb that allow you to rent a room or even your entire home to people on a daily, weekly, or monthly basis. It’s like having your own hotel. This requires extra work/expenses, such as cleaning, but you can set your own prices to cover those factors.
- Rideshare drivers: Rideshare driving allows people to transfer people, food, and items from one location to the other, and it’s an easy way to make money as a senior in the gig economy. It’s also a sociable job that you can do at all hours of the day! The AARP highlighted a success story of an Uber driver in Seattle who has made nearly 3,000 trips in two years and inflated his income on top of having thousands of social interactions, all while working.
- Consultant: Recently retired seniors still have a wealth of knowledge to offer the industry they worked in before hanging it up. Consulting is an easy way to work fewer hours and have a more flexible schedule while still exercising your mind and making money. Even if you’re not directly consulting with a professional, there are apps that look for people to consult with business, medical, and legal advice.
- Online teachers: Companies around the world offer teachers to work remotely from home. Different businesses look for online tutors, who teach topics like math or science, or there may be kids from other countries trying to learn English. (These companies rarely require you to know the student’s native language to teach the new language, too.) These companies don’t require that you have teaching experience, either.
- Child sitting: The gig economy can also include babysitter apps and no, these jobs aren’t restricted to teenagers! Seniors can visit parents’ homes and watch their kids for hours at a time for fees that they set themselves. It’s relatively low stress, and you can pick however many nights you want to work.
- Pet sitting: If you’re not into babysitting, you can always find work with the animals. There are apps dedicated to pet sitting and pet care as a whole. These gigs can last days at a time, where you go to someone’s home (or even stay there) daily and feed, walk, and socialize with someone’s pet. Or they can last around 30 minutes, during which you go to someone’s house, walk the dog, and that’s it!
These are not the only type of jobs seniors can get within the gig economy, so just do your research to find the right company/situation for you.
As we’ve seen with the types of jobs available for seniors, though, the nature of the 21st century lends itself to a senior individual needing to be somewhat privy with technology in order to get the jobs they want. Some things you may need in order to maximize your potential in the gig world include:
- Smartphone: There are many jobs that are prompted by an app on your phone, like ride-sharing or dog walking. More than two-thirds of the population already has a smartphone, and there are hundreds of different types of phones you can get if you don’t have one already. You only need a smartphone that has an app store that allows you to download an app you’ll use to communicate with the company and consumer.
- Computer/laptop: Jobs like online teachers and consultants may use computers, cameras, and conference calls to conduct their business. You don’t need an expensive laptop or computer to do your work, either—just one that allows you to functionally and efficiently get your work done. Having a computer helps when it comes to taxes, too! There are dozens of websites that make it easy for self-employed workers to complete their taxes, which may seem difficult for workers who have to worry about manually taking taxes out of every paycheck.
- Car: This is not a requirement to participate in the gig economy. However, having a car is an obvious requirement for jobs like Uber, Lyft, and food delivery services, which are some of the more consistent self-employed opportunities available.
Whether it’s getting more comfortable with a smartphone or practicing driving routes you’re not familiar with, you can look at boosting your proficiency with these tasks as another skill to learn in post-retirement years.
As of 2017, more than one-third of the whole workforce in the United States is made up of freelance workers.