SAVE FOR RETIREMENT ANY WAY YOU CAN

By Craig Erwin, Ph.D.

Although some other countries’ governments strive to foster a culture of savings over debt, saving for retirement in the U.S. is still challenging, especially for part-timers and Gig workers. Some foreign governments use government programs, incentives, and tax law to help citizens save. Fortunately, the U.S. requires all who are employed to pay a Social Security tax, which ensures that workers can receive regular payments in retirement. It also encourages employees to save in an array of IRS sanctioned retirement savings programs such as 401(k)s, 403(b)s, SEPs, and Individual Retirement Accounts (IRAs). Unfortunately, far too few people are eligible for some of these programs. And although these programs are great ways to save for retirement, one of the few programs suitable for part-time employees is the IRA, because the other programs tend to be offered only to full-time employees. Most of the millions of people who work part-time or for minimum wage are not eligible for employer-sponsored retirement savings plans.

The Gig economy makes saving money for retirement even trickier because it leaves a wide swath of the American population without a formal, employer-sponsored retirement savings vehicle. Many employed in the Gig economy don’t have benefits of any kind, including health care benefits. Why? Because those who work as Gig workers are often treated as freelancers (or independent contractors) by employers who don’t provide benefits. Between Gig economy workers and part-time employees, there are millions of working people who receive few or no benefits and no retirement savings plans.

What can you do to save money for retirement if you don’t work for an employer with a retirement savings plan? One option is to seek employment with an organization that has a retirement savings plan, especially challenging for unskilled workers. If that’s not possible or practical, find out what retirement savings vehicles you are eligible for outside of employment. If you work as an independent contractor or free-lancer, or are self-employed, your best option is likely to open an IRA. There are different types of IRA’s: traditional IRAs, Roth IRAs, Simple IRAs, or Simplified Employee Pension (SEP) IRAs. Click on this link for information on different types of IRAs.

Whichever type of retirement savings vehicle you decide to use, be sure to contribute regularly. If possible, have money taken out of each paycheck automatically to fund your plan, as employer savings plans do.

Americans are notorious for failing to save money. But you can buck the trend and it’s critical that you do. Whether you work for a large corporation with a great 401(k) plan or you are a freelancer, you must do whatever it takes to ensure you can retire some day. Don’t bet that Social Security benefits won’t be cut (not that they provide enough to live on anyway). It is no secret that the US federal government is deep in debt and sinks deeper every day. It may have no choice but to cut Social Security benefits. So, research your options and get started with the best automatic retirement savings plan available to you. It could make the difference between retiring comfortably and not retiring at all.

For information on a great way to start building wealth called dollar-cost averaging, useful no matter which of the above savings vehicles you use, click on the following link:

Do you work part-time or as a free-lancer? Do you find it challenging to save for retirement? Do you expect to accumulate enough wealth to retire comfortably?

For more information on saving for retirement, click on the following links: