New survey results examining the retirement savings habits of independent gig economy workers compared to traditional workers reveal some surprising results.
While traditional workers are more likely to be actively saving for retirement, independent workers are just as likely as traditional workers to feel they are financially prepared for retirement (49% and 47%, respectively). According to T. Rowe Price's second annual survey focused on workers participating in the gig economy, 56% of independent workers are actively saving for retirement (excluding independent workers who identify as already retired), compared to 72% of traditional workers.
Not surprisingly, this finding likely stems from the fact that a majority of traditional workers participate in their employer-sponsored retirement plan (68%) and likely have access to the automatic savings features in those plans, while independent workers primarily use IRAs (40%).
Roughly three-quarters of all independent workers surveyed started working in the gig economy by choice and not out of necessity – primarily because they wanted a more flexible schedule, to be their own boss or to earn more money. The survey also found that just over half of both independent and traditional workers envision working part time or independently in retirement.
To that end, Baby Boomers make up the largest group of independent workers (48%), followed by Generation X (28%) and Millennials (24%), according to the findings. In addition, men account for two-thirds of independent workers.
Independent workers also report that working on their own has made them more involved in their finances. T. Rowe Price notes that for the second consecutive year, an overwhelming majority of independent workers say they are “much more or somewhat more” involved in their finances because of working independently (75%), with Millennials more likely to say this (85%) compared to Gen Xers (73%) and Baby Boomers (71%).
Surprisingly, while most participants report having up to $250,000 saved for retirement, independent workers were more likely than traditional workers to say they have more than $250,000 saved – with 20% of independent workers reporting this, compared with only 14% of traditional workers.
“Without the safety net of being able to save for retirement through an employer-sponsored plan, independent workers have to make active decisions about their retirement,” notes Stuart Ritter, senior financial planner at T. Rowe Price. “So, it’s encouraging to see that many of them are making the effort to save and that this proactive financial behavior extends beyond just saving for retirement.”
Conducted by Beacon Research on behalf of T. Rowe Price, the findings are based on an online national survey of 2,010 adults aged 22-73 conducted from Jan. 24, 2019, to Feb. 16, 2019.
