Workers Using Side Hustles to Redefine Retirement
As money tightens for nearly every generation, individuals are choosing to work a side gig to supplement income. Yet, despite the extra work, some continue to dip into their retirement savings.
A survey from online educational resource My Guide to Retirement found that 24% of those with a side hustle continued to withdraw from their savings or retirement funds in the past year. Seventy-four percent of that number dipped into savings to cover daily costs like rent and food, while 44% said inflation and rising prices led them to extract from their accounts.
This is despite the fact that more people are using side hustles to curb financial insecurity and save for retirement, My Guide to Retirement notes. Forty-four percent of respondents said they took on an extra gig to achieve financial independence or security, while 39% said their main income was not enough, and 37% wanted to cover everyday expenses.
Other reasons included needing to pay off debt (27%), build savings faster (25%), offset inflation or rising costs (25%), monetize a passion (17%), grow a business (11%), deal with job insecurity (8%), or because of a lack of traditional retirement benefits (4%).
Many respondents see side hustles as a means to build up retirement savings, the survey notes. Close to half (46%) of those with a side hustle subsidized at least 25% of their retirement savings from the extra money.
The research underscores a possible solution to retiring on time or even early, My Guide to Retirement observes.
It also opens possible new trends in savings mechanisms. For example, half of respondents said they forgo using plans like a 401(k) or Roth individual retirement account (IRA) and instead use a traditional savings account (53%). Others are putting their future savings into cash or checking accounts, while a smaller number are adding savings to apps like Robinhood or brokerage accounts. Only 38% said they have a 401(k) or an employer-sponsored plan, while 11% reported having no savings for the future or retirement.
Further, rather than contributing a certain percentage per paycheck, most side hustlers are slipping a couple to several hundred of dollars per month to satisfy their savings while budgeting accordingly. According to the research, of those who contribute to retirement, 28% allocated between $100 to $249 while 19% added $250 to $499 per month to savings.
The reduced amount of contributions is intentional, as more workers consider pushing off their retirement. Over half of respondents (55%) expect to retire in their mid-60s or later, while 9% expect to never retire.
Additional findings from the My Guide to Retirement survey can be found here.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.