Workers

Working a gig while in retirement? Manage your Social Security savings

Published

1 month ago

January 20, 2021

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Catherine Brock, The Motley Fool
Published 7:00 a.m. ET Jan. 19, 2021

Feeling unprepared for retirement? Gig work in your senior years could be the solution. At least that’s a conclusion made by a 2020 report from the Center for Retirement Research at Boston College. The study analyzes income replacement rates in retirement for different categories of workers, including those who had large income shortfalls at age 62. Among that group, those who transitioned from traditional work to gig work at 62 were able to shrink their income gap by ages 67-68. Interestingly enough, the gig workers were able to cover more of their income shortfalls versus those who stayed in their traditional jobs.

You could experience the same result, especially if your gig income allows you to delay claiming your Social Security and/or making withdrawals from your savings. Here’s a look at three ways you can manage those income streams to close up your retirement income shortfall by your late 60s:

1. Let the gig work pay the bills

Generate enough income from gig work and you may not need to touch your savings or your Social Security immediately. That’s an ideal scenario since both should grow on their own over the next five or six years.

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Every $100,000 of savings you have should grow to nearly $128,000 in five years if you have it conservatively invested at 5% annual growth. And delaying your Social Security claim raises your benefit amount – first, because you avoid early retirement reductions and, later, because you earn delayed retirement credits.

2. Claim Social Security early and delay retirement distributions

If your gig work income isn’t enough to pay the bills on its own, you could claim Social Security early and put off your retirement distributions until later. Before you decide on this approach, you should know the rules on earning income while receiving Social Security benefits.

You are subject to income limitations if you start receiving Social Security before you reach full retirement age, or FRA. For anyone born after 1942, FRA is at least 66 and at most 67. The income limit can be adjusted each year, but it’s $18,960 in 2021. In the years prior to reaching FRA, your Social Security benefit is reduced by $1 for every $2 earned above that cap. In the year you reach FRA, your earnings are reduced by $1 for every $3 you earn above a different cap. That cap in 2021 is $50,520. Only the money you make before your FRA month is counted.

This strategy makes more sense if two things are true: One, you know you won’t exceed those income caps; and two, a down market has affected your retirement savings balance, and you’d prefer to wait for a recovery before taking distributions.

3. Delay Social Security and take retirement distributions

The third option is to delay your Social Security benefits and use retirement distributions to supplement your gig work income. Waiting to claim Social Security does increase your benefit. Those increases are calculated based on your claiming age relative to your FRA. If you claim before FRA, early retirement reductions can shave up to 30% off your Social Security income. And if you claim after FRA, delayed retirement credits can increase your benefit by up to 24%.

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What’s nice about this strategy is that the income increase you receive is predictable and lasts the rest of your life. To estimate your benefit at different claiming ages, create an account and log in to my Social Security.

Early distributions from your retirement account may also help you with RMDs, or required minimum distributions. These are mandatory, taxable distributions you must take from your IRA or 401(k) accounts starting at age 72. They’re based on your balance at the end of the prior year, along with your life expectancy. If you consume more of your money in earlier years, that lowers your balance later. In turn, your required distributions should also be lower. That gives you the option to leave more money in your account if you don’t need it to pay your bills.

Gig work for improved financial security

Seniors are closing up their retirement income shortfalls with gig work, and you can do the same. Once you find a gig you enjoy, take the time to define your strategies for Social Security and savings withdrawals. Make the right moves and you could be enjoying a comfortable, more traditional retirement in your 70s.

The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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Workers

Biden directive expands jobless aid to self-employed, gig workers and more

Published

3 hours ago

February 25, 2021

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Unemployed Americans who have turned down job offers because they feared their prospective employers weren’t providing sufficient protection from the coronavirus would qualify for jobless aid under a directive the Labor Department issued Thursday.

The measure would also expand a federal unemployment benefits program, established in last spring’s economic relief package, to cover workers who have lost hours or who were laid off because of the pandemic. It would also cover school employees who lose jobs or work hours because of school closings.

The federal program, known as Pandemic Unemployment Assistance, made the self-employed and gig workers eligible for jobless aid for the first time.

“Until now, unemployment insurance benefits during the pandemic have been too scattered and too uncertain,” said Patricia Smith, senior adviser to the labor secretary. “That begins to change today, with many more workers now eligible for unemployment insurance benefits.”

Speaking to reporters, department officials declined to estimate how many Americans would now become newly eligible for jobless benefits.

The benefits will be made retroactive, officials said. People who applied for unemployment benefits after Dec. 27 can receive retroactive payments back to Dec. 6. Those who applied before then and were turned down can receive retroactive payments dating back to when they first applied.

With unemployed Americans now receiving a $300 weekly federal payment on top of state benefits that average about $320 a week, the retroactive aid could result in significant lump sum payments. The department estimates that states won’t be able to update their jobless benefit systems to include the new criteria until late March, which could mean that the first payments would amount to about four months of benefits.

Workers whose employers have closed because of the pandemic are already eligible to receive jobless aid from the federal program. But workers who were laid off even as their company remained open, such as waiters at a restaurant that stayed open for delivery, weren’t eligible. This directive will now cover those workers, the Labor Department said.

For the unemployed who have turned down jobs out of concern over the coronavirus, applicants will have to state under penalty of perjury that their prospective employer wasn’t meeting state or local guidelines on mask-wearing or personal protective equipment, said Suzi Levine, a deputy assistant labor secretary.

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Workers

App-based Delivery Workers of Toronto Unite to Fix the Gig Economy

Published

9 hours ago

February 25, 2021

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TORONTO, Feb. 25, 2021 /CNW/ – The Gig Workers United campaign launched today with a bold scope and agenda for change. Delivery workers say the status quo is simply unsafe and unliveable for those whose jobs are controlled by apps. The workers have come together to call on employers and legislators to make fundamental changes.

“We have to stand up for ourselves – the streets don’t look out for us, the apps don’t look out for us, so we’re looking out for each other and collectively calling out a bad business model,” says Narada Kiondo, one of the courier spokespersons. “The way it is just can’t continue – if the gig economy is going to work for our society than it can’t be based on squeezing delivery workers and restaurants for profit, and dodging our labour standards. And we’re going to persist, and we’ll win, because our bodies and our livelihoods are on the line.”

The roots of this struggle are in experiences including the successes of Justice for Foodora Couriers, which showed over the last two years that collective action in the gig economy is possible, that victories are there to be won, and that the organizing campaign itself makes a real difference in workers’ lives. One year ago, the couriers won the legal right to join a union, and the vast majority voted yes.

Foodora, the employer that was the target of that struggle, is no longer operating in Canada, so the workers have broadened their scope in a new drive to organize delivery workers for all the apps. Working conditions, health issues and risks are common, and many couriers work for multiple apps. Now there is a common home for them to work collectively on their demands.

Jan Simpson, National President, spoke about how CUPW has welcomed the delivery workers into the organization: “The couriers have shown that traditional union organizing is possible in this space. But they’ve gone farther than that, with community-organizing tactics and collective mutual aid. They’ve formed a worker-led organization that we’re proud to support because their fresh energy and ideas are what it takes to improve working conditions and reject silicon valley’s model of exploitation.”

“Our demands are reasonable but our vision is big,” says Arash Manouchehrian, another courier. “We need liveable wages, and transparency on wages and scheduling. We need health and safety protections, we need bathroom access, warm-ups, breaks, all the things that most of our society expects as basics for all workers. We have rights, and it’s up to us to assert those rights until we get the system fixed.”

SOURCE Canadian Union of Postal Workers

For further information: please contact CUPW communications at [email protected] or 613-882-2742

Workers

Gig economy workers demand fair conditions

Published

16 hours ago

February 25, 2021

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James Yang is still angry over the road deaths of five colleagues at work who suffered the same pressure he felt as a food delivery driver.

The Chinese migrant worked for Hungry Panda but says the company booted him off the app after raising concerns about conditions.

Mr Yang earned as little as $12.50 an hour working 12-hour days.

He and fellow gig economy workers met with politicians at federal parliament on Thursday, campaigning for the same rights afforded to other workers.

Labor leader Anthony Albanese believes gig workers should be given the minimum wage and greater scope to access other base employment standards.

He urged the Morrison government to stand up to Uber and Hungry Panda in the same way it took on tech giants over the news media bargaining code.

“What we can’t have is a circumstance whereby we have two industrial relations systems,” Mr Albanese said.

“One that has pay, one that has annual leave, sick leave, one that has conditions that most Australians take for granted, and another whole section of society who are marginalised, who don’t enjoy any minimum wage.”

Industrial Relations Minister Christian Porter said he had a great deal of sympathy for Mr Yang but he’s not going to tell him there’s an easy fix.

He said the Fair Work Commission had consistently ruled gig workers were contractors and not subject to the same conditions as employees.

Mr Porter said media code negotiations with Facebook and Google were years in the making after a consumer watchdog inquiry.

He noted the cost to business of changing the gig model and impact on consumer pricing as key complexities in regulating the sector.

Rideshare driver Malcolm McKenzie said gig workers didn’t have the same avenues to pursue unfair dismissal.

“Drivers face the possibility of termination through the app as a result of a fallacious claim against them, unsubstantiated claim against them,” he said.

Delivery driver Ashley Moreland said he faced losing his job if orders weren’t met on the company’s timeline.

“It really is time that laws caught up to the technology and that we brought some rights to this industry,” he said.

“Because I think it’s a bit of a shame that in a modern developed democracy, we have this situation of third world work.”

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