Study analyses savings and retirement shortfalls of freelancers.
5 Apr 2023
A sixth segment of a broad new study sponsored by Legal & General Group (LGEN, LGNNY), U.S. Gig Economy, Part 6: Gig Workers come up short on their future financial and retirement planning, was released today. It follows a Special Report for International Women’s Day, Tasked With Both Childcare and Earning, Women Fall Behind Their Male Counterparts, which looked into the gender pay gap, lowered retirement expectations, and other inequities experienced by female gig workers. This latest report looks into the financial challenges people working in the U.S. Gig Economy face as they contemplate a post-retirement life.
This sixth report in the data-rich study explores the challenges many gig workers face, from being unable to cover an unexpected $1,000 expense to lacking the ability to plan for retirement. The study found that more than half (53 percent) of the freelancers surveyed thought that gig work negatively impacted their access to savings and retirement plans, while 29 percent felt that choosing to work this way negatively affected their ability to save.
Though they have higher levels of financial literacy than the average American, independent workers find that retirement planning poses a particularly difficult challenge, according to Legal & General’s U.S. Gig Economy research. While the survey elicited a complex array of responses to a question about which financial security benefits they hold, more than three-quarters (77 percent) of those surveyed said their own personal savings will provide the largest contribution to their retirement income—while 30 percent of gig workers never expect to retire at all.
Sir Nigel Wilson, Chief Executive, Legal & General Group:
“Even as we see companies developing a sense of purpose beyond profit, a large percentage of American gig workers have been reflecting this trend in microcosm. When it comes to how they earn their living, they land hard on the side of purpose, individualism and free thinking. With the ranks of freelancers growing, large employers will clearly have to take a good hard look at what they are offering their salaried workers beyond a steady pay check. The labor environment is changing, and the private sector, increasingly looking to be agile, needs to change with it.”
Legal & General’s study looks at the multifaceted societal factors leading to gig workers’ long-term financial insecurity, including the added stress of managing their own long-term financial matters far more conscientiously than traditionally employed W2 workers do.
John Godfrey, Director of Levelling-Up, Legal & General Group:
“Our research points to some key differences between gig workers in the U.S. and those in the UK, notably the different mindset the two groups have toward saving. Parsing the issue for U.S. freelancers has allowed a view into some potential solutions to freelancers’ financial anxiety, particularly around unmet insurance and retirement needs. We hope some of the ideas presented in this report will lead to innovation that can create better financial habits and, in the end, improved long-term financial security for gig workers.”
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2022