According to a recent study by JPMorgan Chase, more than 400,000 seniors now do gig work acquired through online platforms. Older workers, in fact, are getting a greater share of their income from online sites than millennials, who supposedly are most involved in the gig economy.
Katherine Reynolds is a resident of The Villages, Florida, the largest retirement community in the United States and a pretty prosperous place. Reynolds is in line with the demographic profile, although her level of affluence tilts toward the lower end since the death of her husband, Albert, two years ago. Unlike most Villagers, Albert had no interest in retiring full time and worked about 35 hours a week as a successful realtor.
He and Katherine spent much of what he earned, and he had no pension, and so his passing began to squeeze her financially.
As it turns out, however, it wasn’t a problem because Reynolds has joined the ranks of the “gig economy” – the artful phrase for finding work through online intermediaries – as a pet sitter with DogVacay.com. With tips, she earns about $400 a week – not a large sum, to be sure, but enough to tie up loose financial ends and give her pocket money, as well as a sense of purpose.
“Most of my friends in The Villages play golf several days a week, go on site-seeing or shopping trips and participate in numerous other leisure activities,” says Reynolds, whose name has been changed because she values her privacy. “This is fine, but I also think it’s important to have a sense of purpose, and paid employment provides that for me.”
400,000-plus Seniors Now Do Gig Work
According to a recent study by JPMorgan Chase, more than 400,000 seniors now do gig work acquired through online platforms. Older workers, in fact, are getting a greater share of their income from online sites than millennials, who supposedly are most involved in the gig economy. Seniors, in particular, like this world because it permits flexible hours. If they want, they can periodically work only a couple weeks at a time, leaving ample time for travel and other interests. For more ambitious seniors, the gig economy is an opportunity to engage in their own service business for a minimal outlay of money.
Just a small number of the employment possibilities include Uber or Lyft (match drivers with people who need rides), Rover (matches dog owners with dog walkers), TaskRabbit (matches homeowners with people nearby with handyman skills) and Wyzant (enables people to find a nearby expert or tutor in a wealth of areas).
JPMorgan Chase found that seniors earn about 25% of their income from working. According to the Bureau of Labor Statistics (BLS), workers age 65 and over account for 6.1% of the U.S. labor force, up sharply from 3.6% in 2006, and are expected to continue to grow briskly. JP Morgan and other experts say much of the increase will come in the gig economy.
One Villager Opts for Uber
Among those who can see why is William Andrulatis, another Villager who started driving for Uber last year. Like Reynolds, he likes gainful employment almost as much for its sense of accomplishment as the money. He previously worked for a van service that shuttles Villagers to and from Orlando International Airport, but strict schedules often interfered with his passion for regular golf outings with friends. In addition, Andrulatis got bored with predominately highway driving and the relative difficulty of striking up conversations in a van full of people.
“What makes driving for hire fun are the one-on-one conversations you get into with a wide array of people who have moved to The Villages from all over the country and who have markedly different backgrounds,” Andrulatis says. “It’s important to find a way to have fun while you work, especially if you’re retired.
“You’re not just working for the money” Andrulatis emphasizes. “In fact, most of us at The Villages really don’t need the money.”
Shirley Spinelli, another Villager, has used the gig economy to double-up on income sources. Many people like to sample life in The Villages before making the commitment to move there and buying a home. That made Spinelli, who has a large extra bedroom in her home near Sumter Landing, one of The Villages’ three town squares, is a perfect candidate for Airbnb, which enables people to rent out a spare bedroom or two. She is sociable and also likes the company.
In addition, Spinelli has signed on to Rover.com, an online platform that connects willing dog walkers with people who periodically need someone else to walk their dogs. This is a particularly good gig in The Villages, a dog lover’s paradise with almost as many dogs, often pure breeds, as residents. Spinelli could, of course, run this business in The Villages without the help of Rover.com, but customers come and go and she prefers to sidestep all the required marketing.
A Side Attraction of Gig Work: Feeling Productive
“I’m earning money, I’m feeling good about myself, and I enjoy the exercise,” Spinelli says. “I’ve come to realize that dogs have personalities almost as distinct as humans. As long as they don’t have behavioral issues – and the dogs I deal with seldom do – they’re great company.”
The gig economy, a product of the 21st century, has come along at a good time. Seniors are turning to gig work as they face longer life spans and the number of traditional employment opportunities largely stagnates. Employment in traditional jobs declined a bit between 2005 and 2015, says the BLS. But the percentage of workers in alternative work arrangements – including on-call workers and independent contractors – approached 16% at the end of 2015 – a 50%-plus increase in the past decade, according to the National Bureau of Economic Research (NBER). The sharpest increase in alternative work arrangements was among workers age 55 to 75, adds the NBER.
This is not to suggest that gig work is not without challenges. Income varies and tends to be unpredictable — no plus for budgeting. Traditional workplace benefits, such as unemployment insurance, are non-existent. And gig workers are self-employed, which means they have to track income and expenses and file quarterly estimated tax payments.
But who could argue that the benefits do not materially outweigh the drawbacks? Certainly not many Villagers. In addition to earning money, they’re meeting people they otherwise would not, staying engaged in the workforce and usually having a good time along the way. You could do much worse in retirement.
Tips for a Would-Be Gig Worker
Think the gig economy is a good opportunity to pursue?
You’re on to something – it’s growing briskly, and every indication is that it will continue doing so. Just bear in mind that a gig job is not a traditional job. Rather, you’re an independent contractor, and that means, among other things, the workflow is uneven and that you’re responsible for tracking your earnings and expenses for tax purposes.
Here are six tips to weigh to help make sure a gig job is the right fit for you.
Prepare yourself for an erratic income stream.
This takes getting used to if, like most retirees, you’re accustomed to collecting a paycheck most of your working life. One way to manage the ups and downs is to withdraw the income you need from, say, a savings or money market account. Think of gig income as short-term savings, not money to pay your bills. Gig workers typically stash away money when work is ample to carry them through slow times.
Remember that you are now self-employed.
Act accordingly. You need to track income and expenses because no employer is withholding taxes from your paycheck. On-demand sites may or may not send you a Form 1099 listing income you have earned during the year. Regardless, the income will be taxable.
Think of yourself as a salesman who works on commission.
To be relatively successful, you have to be self-motivated. Essentially, you have no boss per se. You are the boss. You don’t have to worry about getting fired, but you do have to worry about earning enough income to justify the effort you put into a gig job.
Document job-related expenses as they occur.
Ultimately, these will be deducted on your tax return. If you drive for Uber or Lyft, for example, log your deductible business mileage every day you work. Also deductible are parking fees and tolls, if any. If you own a home and work from home, at least in part, you may be able to deduct $1,500 a year relatively easily.
You have to pay a hefty “self-employment tax” and also make quarterly estimated tax payments.
Your annual tab for Social Security and Medicare is 15.3% of your income — twice what you paid as a traditional employee. On-demand web sites may or may not send you a 1099 Form showing the income you have earned during the year. Regardless, your income is still taxable.
If you earn enough to make it feasible, try to postpone taking Social Security until age 70.
Or if you have already been taking Social Security, see if you can afford to turn it off until age 70. Ever year you delay taking Social Security payments, you add 8% to the back end for life. If you’re eligible for Social Security, postponing payments is probably the best way to save money – period.
— Steve Kaufman
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