Getting Started with Retirement Savings for Contract Workers

Contract workers in the US are facing a retirement savings crisis, with more than 1 in 10 workers now classified as independent or gig workers. The number of these workers has nearly doubled since 2020, leaving many without access to employer-sponsored retirement benefits.

According to experts, the lack of employer-sponsored plans has led to a significant portion of workers not taking the initiative to save for retirement on their own. Only a fraction of workers without access to a retirement plan open their own savings account, compared to a 72% participation rate for those with access to an employer-sponsored plan.

To address this issue, experts recommend several relatively painless saving options for contract workers. One option is to save for retirement in a tax-advantaged account like an Individual Retirement Account (IRA), even if starting with a small amount. Other options include a traditional IRA, a Roth IRA, a SEP-IRA, a solo 401(k), and a health savings account (HSA).

Experts emphasize the importance of starting to save for retirement early and consistently, regardless of income level. Automating savings contributions can help contract workers build a nest egg over time, and taking advantage of tax credits like the saver’s credit can provide additional incentives for saving.

Overall, the message is clear: contract workers need to take control of their retirement savings and explore the various options available to them to secure their financial future. By starting early and being consistent, even small contributions can add up over time to provide a comfortable retirement.