Got a good gig? Don’t neglect retirement savings

Media Contact: Barbara M. Fornasiero, EAFocus Communications; barbara@eafocus.com; 248.260.8466

Royal Oak, Mich.—March 27, 2023—Recent statistics find that around a quarter of all gig economy workers have no retirement savings, and while these nontraditional workers want the freedom, flexibility and potential income these types of jobs offer, financial benefits—or lack thereof—are a serious concern for the self-employed.  Employee benefits and ERISA attorney, J.J. Conway, founder of J.J. Conway Law, points out the onus is on gig workers to determine their financial futures and often devise their own retirement saving plans.

“Traditional retirement benefit plans are designed for workers who are ending their primary careers at a certain age and after a certain number of years of service–not for the large numbers of workers who strike out on their own,” Conway said. “The absence of any form of long-term personal safety net can be problematic, especially for the gig economy worker who has not been regularly keeping up with self-employment tax responsibilities—which can result in a loss of Social Security benefits.”

 Gig workers cite a variety of reasons as to why they haven’t been more proactive in planning for their financial future, including having no access to an employer sponsored 401(k), insufficient income, and limited or no financial awareness around the importance of retirement planning. While some of these facets could improve, Conway suggests non-traditional workers should learn and understand up front what benefits are available. Some contractors are offered fringe benefits such as healthcare, disability coverage and, less common, access to retirement savings plans—depending on the company. Also, some major companies use national contracting services that provide benefits that most workers would find competitive in the marketplace.

 If retirement benefits from the company are not an option, then nontraditional workers need to be disciplined to plan and save on their own.  Fortunately, Conway says, there are tax-efficient retirement savings vehicles available—and if properly used, can lead to transformational wealth building and provide for a stable retirement. Among the options available to gig workers are:

 An individual 401(k) plan

• Self-Employed Pension (SEP) Plan
• Pre-tax and post-tax Individual Retirement Accounts (IRAs)

 Highlighting the tax benefits associated with contributing to these plans, Conway also noted many gig workers leave money on the table by not contributing to them. For example, creating a tax-qualified SEP IRA could provide one of the highest tax deductions possible this tax year. Individual taxable income can be reduced by up to $61,000 in 2022 and $66,000 in 2023. That’s a significant benefit to the gig economy worker.

 It’s not only retirement benefits that are of concern in the gig economy, however; health insurance is another pressing issue. According to a recent survey, approximately 24% of gig economy workers have no health insurance coverage. Of the reasons for failing to secure health insurance, affordability remains the single largest reason for the gig worker’s uninsured status. The second most cited cause was insufficient knowledge of the availability of health benefit options in the marketplace.

 “Workers who choose self-employment through the gig economy have options available, but they are responsible for designing their own employee benefit plans and determining their financial futures, much more so than those who hold traditional jobs,” Conway said. “For gig workers ready to take the first step to protect their financial and personal well-being but don’t know where to start, they can find initial guidance through local financial institutions like credit unions and banks, as well as financial advisors and insurance agents.”

 About J.J. Conway Law

J.J. Conway Law was founded by John Joseph (J.J.) Conway in 1999 to work with individuals seeking full access to the employee benefits they have earned. The firm has been involved with nationally significant employee benefit, disability and pension cases, including class action lawsuits for such landmark decisions as requiring Michigan private insurers to cover autism health treatments for children through age 18 and protecting the pension rights of City of Detroit employees, police and firefighters as well as Wayne County employees by holding their trustees accountable for investment decisions. The firm’s motto is “Conquer Tomorrow^®” and is dedicated to making tomorrow easier for their clients across the United States.  Learn more on the firm’s website.