As the modern economy continues to become centered on advancements and changes in on-demand technology and services, the transition into retirement will likely change with it. This is one of the thoughts driving an opinion piece at Financial Planning written by Archer Investment Management partner and investment advisor Nina O’Neal.
In her piece titled “How the gig economy is changing retirement planning,” O’Neal details the inspiration for her piece by describing an encounter with an Uber driver that surprised her, since the driver was a woman in her 80s. When O’Neal asked the driver about why she works for the ride-sharing service, she memorably replied, “Because it’s a lot more entertaining than my husband, and we need the additional income for our retirement.”
According to the findings of a study conducted by Prudential in 2017 – detailed in a white paper called “Gig Workers in America” – 31 percent of surveyed participants who work for “gig” services are baby boomers between the ages of 54 and 74. Of those, only 31 percent said that they had financial problems. On top of the clear addition of boomers into those positions, 75 percent of the retirees surveyed said that they were happy with the arrangements as they stood, and were not considering making any changes to them.
Additionally, a report released by Betterment in 2018 reveals that 49 percent of people over the age of 55 are saving for retirement with a “side gig,” also observing that “the closer these side-hustlers get to retirement age, the more likely they are to be using their gig economy job to save for retirement.”
Major changes are happening in the act of retirement itself, and O’Neal describes how it appears to be evolving out of a system that used to be comprised primarily of workers spending decades at one company before retiring and collecting pension checks until the end of their lives.
Now, affected by factors like ever-increasing life expectancy, lack of savings among older people and strains afflicting pension funds and Social Security, these observations lead her to ask if planners have recognized and adjusted to these new realities, particularly when it comes to looking beyond “traditional portfolio management” in generating retirement income for their clients.
“We may have to consider a broader view of retirement income options so our clients have sustainable assets during their retirement years,” she writes.
Find more information by reading O’Neal’s full opinion piece, as well as the 2017 Prudential study on workers in the gig economy.