How Gig Economy Workers Can Save for Retirement
Here are 4 things to keep in mind.
Carole Hodorowicz: Working in the gig economy might offer some perks like a flexible schedule and lucrative contract jobs.
However, there are some trade-offs that might create financial stress, like no employee-provided health insurance or retirement plans.
How can you bring some balance to those trade-offs? Here are some steps to take.
First...make sure you are covered. You will likely run into shorter-term financial bumps in the road. Morningstar’s Christine Benz says to line up adequate insurance coverage and consider contributing to a health savings account.
Second...have a safety net. Anything can happen. Be prepared for the unexpected with an emergency fund. Benz suggests trying to save up at least a year’s worth of living expenses.
Third...fund a traditional or Roth IRA. IRAs are easy to set up and have a variety of options. They make it easy to save for retirement.
Lastly...go your own pace. You are more likely to have irregular paychecks.
So, while your retirement savings can be invested like the savings of any other worker, consider managing your portfolio more conservatively just in case you need to tap into it unexpectedly.