While gig workers and ride-hailing service drivers have increased in numbers by 15% in the last ten years, the pandemic has rocked these statistics and made things unpredictable for many.
In many places, drivers struggle to secure rides regularly. Meanwhile, food delivery couriers have seen quite a spike in work. The pandemic has increased the number of people who order food from home to practice social distancing.
With gig workers tethered to the edge, it makes sense that they take steps to secure their retirement. If you are a gig worker worried about retirement and want to take some practical steps in that direction, here are some tips.
Start With An Emergency Fund
While this may feel like it should not be your priority, it is necessary. The accumulation of retirement funds is a long and steady process. Before you start taking your retirement funds seriously, you need first to create an emergency fund. This way, when stuff hits the fans, you don’t form a habit of pulling out money from your retirement savings.
The best way to go about it is to budget between 4 to 6 months of expenses. If you can, you can even extend it to a year before you contribute to your retirement savings.
As a gig worker, how much work you take on is in your control. Take up more work: accept more rides or deliver more orders. Whatever it takes, set up an emergency fund. If 2020 taught gig drivers anything, it’s that you have to prepare for the unexpected.
Look Up Health Insurance For Gig Workers
Nobody wants to think about it till they need it. Health expenses can rack up quite a dent in your pocket. Before you start compromising your savings, make sure you are taking advantage of an insurance plan instead. Traditionally independent contractors do not have access to benefits like health and dental, but in recent years there have been a lot of new platforms that make healthcare accessible.
Research Solo 401(k)
The 401(k) can be utilized even without employment. As a gig worker, you can request a solo or an individual 401(k) at your local IRS office.
This retirement vehicle is an attractive option as drivers can withdraw what they contributed (not what they invested) without having to pay a penalty fee or hefty expenses.
The most challenging task is accumulating your savings every week. Sometimes, it is hard not to dip into your retirement funds. Especially when you do not have job security as a self-employed gig worker, but it would be best if you refrained from this.
