A survey conducted by the Pew Charitable Trusts on retirement savings challenges faced by nontraditional workers, the following top five key findings were identified: We have taken these key findings and put together real world solutions from the perspective of gig workers and employers.
#1 Survey Results: Lack of Access to Retirement Plans. More than half (53.7%) of nontraditional workers reported that their employers didn't offer retirement plans, which was their most significant challenge.
Employer Solution: Establish portable retirement accounts that nontraditional workers can take with them from job to job. These accounts could be administered by independent financial institutions or government agencies.
Gig Worker Solution: Non-traditional workers can express their desire for retirement plans to their employers and encourage them to consider offering options like 401(k)s or SIMPLE IRAs. Employee demand can influence employer decisions. They should also explore Individual Retirement Accounts which are portable retirement accounts that do not rely on employer offerings. They can contribute to these accounts regularly to save for retirement. *See here for options
#2 Survey Results: There is a Strong Demand for Retirement Plans If given the opportunity, 77.5% of nontraditional workers expressed a strong desire to participate in a defined contribution savings plan, ranking second only to health benefits in importance.
Corporate Solution: Offer defined contribution plans, such as 401(k)s or SIMPLE IRAs, to nontraditional workers. This can be incentivized through tax benefits or other incentives.
Gig Workers Solution: Various retirement savings options, such as automatic transfers from banks, saving through tax filings, and using apps or websites for automated savings, received positive responses from survey participants.
#3 Survey Results: Uncertainty and Familiarity. A significant percentage (20-40%) of respondents expressed uncertainty about participating in these retirement savings options, possibly due to their unfamiliarity with the concepts presented.
Employer Solution: Launch education campaigns to raise awareness and understanding of retirement savings options among nontraditional workers. Workshops, webinars, and informational materials can help demystify these concepts and address uncertainty.
Gig Worker Solution: Proactively seek out educational resources and attend workshops or webinars to better understand retirement savings options. They can also consult with financial advisors for personalized guidance.
#4 Survey Results: Ease of Enrollment The ease of access and user-friendliness are crucial factors for potential solutions, with automatic enrollment likely to increase participation. Automation did not discourage interest, and workers paid electronically showed more openness to such solutions.
Employer Solution When employers offer automatic enrollment in retirement plans, savers should consider taking advantage of this feature. This ensures they start saving without having to make an active decision.
Gig Worker Solution: When an employer gives you the option,then opt for automatic enrollment.
#5 Survey Results: Ease of Automation The ease of access and user-friendliness are crucial factors for potential solutions, with automated contributions likely to increase participation. Automation did not discourage interest, and workers paid electronically showed more openness to such solutions.
Employer Solutions: Set up automated contributions to retirement accounts, either through payroll deductions or direct transfers, making it a hassle-free way to save.
Partner with companies that pay nontraditional workers electronically (e.g., gig economy platforms) to integrate retirement savings options into their payment systems. Workers can choose to allocate a portion of their earnings directly to a retirement account.
