Posted by: Jennifer Johnson
It’s no secret that many boomers approaching their retirement years are anxious about having enough income. But many are finding help — by turning to the so-called gig economy.
Several seniors are making money in this 21st century way, and seem happy with the arrangement! One (a retired airline stewardess who speaks several languages) is an Uber driver and drives passengers to and from airports. During the drive, she shares valuable insights into travel and dealing with airlines. Another is a retired empty-nest couple who rent out a room in their home for short term guests. It gives the couple some extra money and companionship.
These gig-economy seniors have plenty of company. According to a recent study by the JPMorgan Chase Institute (JPM), roughly 1% of seniors — more than 400,000 nationally — are earning money this way. The researchers used techniques to study the financial lives of seniors by analyzing data on millions of anonymized Chase customers. Although the absolute numbers are still small, researchers found that more seniors are supplementing their income by participating in the “online platform,” or gig economy.
The gig economy can be particularly attractive to seniors because it permits flexible work and allows people to generate income from accumulated assets. The report distinguishes between labor and capital platforms. Labor platforms, such as Uber or TaskRabbit, connect customers with freelancers who perform specific tasks or assignments. Capital platforms, such as eBay or Airbnb, connect customers with people who rent their assets or sell goods peer-to-peer.
For seniors, these earnings can be a substantial supplement to their retirement income. Those who were established participants in labor platforms earned on average more than one-fourth (28%) of their total income this way. Seniors who were established participants in capital platforms earned an average of 11.5% of their income from those platforms.
For example, 24% of all Uber drivers are over age 50, and 3% report being formerly retired. Similarly, Bloomberg reports that people age 60-plus are the fastest-growing and best-reviewed age group on Airbnb. DogVacay, which connects pet sitters with owners, reports that people over the age of 50 constitute 25% of sitters.
The JPMorgan Chase Institute reports that seniors earn about 25% of their income from working and that this share may rise in the future. It found the percentage of seniors in the work force has been increasing recently, from 20.7% in 2009 to 23.1% in 2015. The institute anticipates that much of the anticipated rise will come from the gig economy.
Of course, earning income in the gig economy has some downsides. Most of the time, workers are considered contractors and are responsible for paying their own taxes. In addition, the income can be quite unpredictable. However, these drawbacks may be an acceptable trade-off to earning additional spending money to supplement Social Security and other retirement income.
While online platforms are very useful for connecting people, you don’t necessarily need to resort to this new technology to make money — you can use old-fashioned networking and referrals. Several freelancers and consultants find their work through old-fashioned connections.
All of these examples share a common theme: seniors taking advantage of life-long skills, connections and assets to earn extra spending money in their retirement years. In the process, they’re staying engaged, meeting people and having fun in the process. That’s a winning combination.
Our firm is dedicated to helping seniors and their loved ones work through issues and implement sound legal planning to address them. If we can help in any way, please don’t hesitate to contact our office at (630) 221-1755.