Rethinking Retirement for the Gig Economy

Freelancers and gig economy workers have become a regular feature of the today’s economic landscape.  While these folks love the freedom and flexibility of the 1099 Economy, they also fear the precarious nature of freelancing, especially when it comes to paying for health care and retirement.  An interesting new survey sponsored by Small Business Majority examines small business owner and freelancer attitudes toward retirement savings and benefits.   To sum up, it’s not a good situation today.   A large share of surveyed small business owners (with less than 25 employees) uses freelancers on a regular basis, thanks to the benefits of these more flexible work arrangements. These freelancers receive no health or retirement benefits from these gigs, but full time employees face a similar fate as few small business owners can afford to provide benefits. In fact, 57% of surveyed small business owners provide no retirement benefits to their employees. This should not be a surprise, since the owners rarely fund retirement benefits for themselves either.  Only 39% of surveyed owners felt that they had sufficient savings for retirement.

The reasons for this lack of investment in benefits are not complex:  retirement plans are too costly and too complicated.   Nearly 75% of business owners would like to see more incentives to encourage retirement savings and to provide benefits to gig economy workers as well.   Sixty-nine percent supported the creation of multi-employer benefit exchanges as means to support the provision of health, retirement and other benefits.

Too many people are living and working in precarious conditions where they are one injury or one bad break away from financial ruin.  New structures for a new social safety net are clearly needed, and, as this survey suggests, there is growing support for action.

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