5 Methods Gig Economic system Staff Can Save for Retirement

Economy

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We are in the midst of a major economic change. While workers in the past could expect to keep a stable job with a traditional employer for decades, workers today have found that they either need to cobble together a career from a variety of gigs or supplement a lackluster salary from a traditional job with freelance work in her spare time.

While you can make a living (and possibly a good one) in the gig economy, this type of job makes gig workers vulnerable in one very important way: retirement savings.

Without the support of an employer-sponsored retirement account, many gig workers don’t save enough for their golden years. According to a recent report from Betterment, seven in ten full-time gig workers say they are unprepared to maintain their current retirement lifestyle, while three in ten say they don’t regularly put money aside for retirement.

So what should a gig worker do if they don’t want to drive for Uber and bring TaskRabbit jobs into their 70s and 80s? Here are five things you can do to save for retirement as a member of the gig economy. (See also: 15 lucrative sideline jobs for city dwellers)

1. Take stock of what you have

Many people don’t know exactly how much money they have. And it’s impossible to plan your retirement if you don’t know where you are today. Therefore, any retirement plan should start with a look at what you already have in the accounts on your behalf.

Add up how much is in your checking and savings accounts, any neglected retirement accounts you may have acquired from previous traditional jobs, cash if your gig work relies on cash, or other financial accounts. The grand total could be more than you think if you didn’t recently take stock of where you are.

Even if you really only have some pocket money and a few quarters in your name, knowing where you are is better than proceeding without a clear picture of your financial reality. (See Also: These 13 Numbers Are Critical To Understanding Your Finances)

2. Open an IRA

If you don’t already have a retirement account to deposit into, you’ll need to set one up asap. You can’t save for retirement if you don’t have an account to deposit money into.

IRAs are created specifically for individual investors and you can easily get started online. If you have money to roll over from a 401 (k), you have more options as some IRAs have a minimum investment amount (usually $ 1,000). If you have less to open your account, consider opting for a Roth IRA as these often have no minimum amounts.

The difference between the traditional IRA and the Roth IRA is in how taxes are collected. A traditional IRA allows you to fund the account with pre-tax income. In other words, every dollar you put into an IRA is a dollar that you don’t have to use as income. However, you will have to pay normal income tax on your IRA distributions once you reach retirement. Roth IRAs are funded with already taxed money, so you can make distributions tax-free in retirement.

Many gig workers choose a Roth IRA because their current tax burden is low. If you expect to make more over the course of your career, using a Roth IRA for retirement investment can protect you from the retired tax officer.

Whether you choose a Roth or a traditional IRA, the contribution limit per year as of 2018 is $ 5,500 for workers under 50 and $ 6,500 for anyone over 50.

3. Avoid the bite of investment fees

While no investor wants to lose portfolio growth through fees, it is especially important for gig workers to choose asset allocations that minimize investment fees. That’s because gig workers are likely to have less money to invest, so every dollar has to work hard for them.

Investing in index funds is a great way to ensure that investment fees are not draining the life of your retirement account. Index funds are mutual funds that mimic a specific market index, such as the S&P 500. Since there is no portfolio manager to select investments, there are no management fees for index funds. (See Also: How To Start Investing With Just $ 100)

4. Say hello to automation

One of the biggest challenges as a gig worker is the fact that your income is variable – which makes it very difficult to deposit the same amount every month. This is where technology comes in.

First, set up an automatic transfer of an amount of money that you won’t miss. Whether you can save $ 50 a week or $ 5 a month, quietly pulling a small amount of money into your IRA gives you a little cushion that you don’t have to think about.

From there, consider using a savings app to run the retirement plan for you. For example, Digit analyzes the inflow and outflow of your current account and determines an amount that can be safely saved without triggering an overdraft, and automatically transfers this amount to a savings account. You can then transfer your Digi balance to your retirement account.

5. Invest the money you find

An excellent way to ensure that you get the most out of your contributions each year is to change your mindset about “money found”. For example, when you get a birthday check from your grandmother, you only spend half of it and put the rest in your retirement account. If you get a tax refund (which is a little less likely if you’re a gig worker who pays estimated quarterly taxes), send at least half of the refund into your retirement.

Any gig worker who often receives cash can also set their own rules for the cash received. For example, you might decide that every $ 5 bill you receive must go into your retirement plan. That will help you change the way you view money and give you an opportunity to increase your retirement savings.

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While you can make a living (and possibly a good one) in the gig economy, what can gig workers do if they don't drive for Uber and want to bring TaskRabbit jobs into their 70s and 80s? Here are five things you can do to save for retirement as a member of the gig economy. | #CareerandIncome #Career Tips #Retirement #Budgeting

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