With a sizable percentage of American workers doing temporary, contract or on-demand work, the pressure is on everyone — companies, policymakers, the retirement industry and workers themselves — to figure out ways to make them better prepared for retirement.
They don't have much time to get it done, according to some projections.
Nearly 1 in 5 U.S. workers, on average, will be contingent by 2020, says the EY Contingent Workforce Study, with other private-sector surveys projecting even higher numbers. And when part-time workers are included, as many as 40% of the workforce or more could be in non-permanent employment by 2020, the EY study found.
Complicating matters is that "gig" workers are hard to categorize. Despite perceptions that gig workers tend to be younger, a new Bureau of Labor Statistics survey of contingent and alternative employment arrangements released in June found that the largest cohort (37%) were workers 55 or older.
BLS found that as of May 2017, 3.8% of workers held contingent jobs that were temporary or short-term. In addition, 6.9% were independent contractors, 1.7% were on-call workers, 0.9% came through temporary help agencies and 0.6% were provided by contract firms.
A 2018 report on the gig economy and retirement from Betterment LLC, an online investment management firm with $14 billion in assets under management, divides workers into two categories: "full-time giggers," relying on those jobs as their main source of income, and "side-hustlers," who supplement a regular job with independent or temporary work.
Based on an online survey conducted in February, the report found that 7 out of 10 full-time gig workers are unprepared for retirement, with 3 in 10 setting aside no money for it. A third of the survey respondents did not expect Social Security to be around when they retire. For a third of the side-hustlers, lack of retirement savings is their main motivation for gig work, and that number increases the closer they get to retirement age.
A Harris Poll survey conducted for Prudential Financial Inc. and released June 26 looked at a nationally representative sample of 1,524 workers, broken down by generations. Of the 577 exclusively gig workers, 20% were millennials (ages 18-35), 45% were Generation X, (ages 36-55), and 35% were baby boomers (56 and over).