Posted by Melanie Simons .
The way we work is evolving—and so too is the way we retire. I’m no Pollyanna, but I see all this change as mostly positive, with exciting opportunities opening up for workers planning retirement—and retirees seeking work.
Retirees in demand
Once upon a time, employees worked for the same company throughout their entire careers, often in the town where they grew up, waiting for the day they were handed a watch and company pension. Then they completely withdrew from the workforce. Awaiting them were rounds of golf and cruise ships—the ultimate rewards for a lifetime’s labor.
Nowadays, retirees are more likely to play golf on their smartphones and cruise from one “gig” to another, making money and new friends along the way. The gig (or “sharing”) economy is ideal for retirees looking to set their own hours—taking a week off here or there—or to work from the comfort of their home or car. They finally get to be their own boss, with hundreds of online platforms connecting gig workers to customers demanding every kind of service you could name, from taxi driving to teaching. There’s even one for renting out your airplane.
Medical advances are enabling retirees to live increasingly longer, healthier lives, so they need to generate income that will last longer. What this usually means is going out (or staying in) to earn supplemental retirement income. 30 or 40 years is a long time to not be productive. Earning throughout your 60s also lets you delay claiming Social Security and, therefore, maximize your monthly benefits.
You don’t need existing connections to get started, and can try out some new role (dog walker! masseuse!) without any of the risk associated with launching your own business or signing on for a full-time position. And with no job interview to get through, age discrimination is less of an issue, too.
Whatever your skills, they are likely in demand on one app or another. And you can update them to keep pace with whatever is in most demand. Tech-savvy seniors are learning new skills using just their smartphones, taking courses or listening to ebooks while driving between gigs. The smartphone is a godsend for 65-year-olds who want to retool for the future.
Aside from the economic benefits, there are psychological benefits to staying engaged. Renting out a spare room or walking someone’s dog can lead to social interactions that might not have otherwise happened.
The selfie-employed generation
Of course, it’s not just retirees who are taking advantage of this brave, new on-demand economy. Today, I’m seeing more people take on projects rather than full-time positions, as consultants rather than permanent employees. And they seem to prefer it that way. In 2017, around 10% of all workers were in an “alternative work arrangement,” mostly as independent contractors (a category that includes gig workers). Crucially, 79% of independent contractors said they prefer their alternative work arrangement to traditional.1
If you’re thinking of becoming self-employed, you’ll need to track your income and expenses, which can be a headache come tax season. The IRS offers tax tips and links to relevant publications on its Sharing Economy Tax Center.
Gig work can be unpredictable, and you won’t have access to traditional workplace benefits such as health insurance and a 401(k). You’ll need to build your own safety net, saving money during those busier times when your services are in demand, to carry you through leaner times. You may want to consider setting up your own single-participant 401(k) plan or a Simplified Employee Pension Plan (SEP Plan), which allows self-employed workers to set aside up to 25% of their pay.
In the absence of a traditional workplace to provide financial stability for the future, gig workers taking advantage of digital platforms need to extend their tech savvy to the many saving and investing tools available online.
Gig work is allowing more people to smoothly transition from full-time employment to full retirement. Our grandparents may have enjoyed the security of company pensions and jobs-for-life, but they also had the constraints that came with it. Smartphones empower anyone willing to embrace technological change and use it to shape her professional destiny. Just make sure you use them to take control of your financial destiny, too.