Smart Financial Moves for 'Gig' Economy Workers

Submitted by Edward JonesPrint Story | Email Story

Not that long ago, most people worked for some type of an organization, such as a business or the government or a school district. But today, more and more workers are going their own way and joining what's known as the "gig" economy. If you will be one of them, you'll want to make the right moves to advance your financial goals in what can be a challenging work environment.

But first, you may find some comfort in knowing the prevalence of gig work. About 36 percent of U.S. workers are now gig workers, according to a study from the Gallup organization, which defines the gig economy as one made up of a variety of arrangements – independent contractors, online platform workers, contract workers, on-call workers, temporary workers and freelancers. People join the gig economy for many reasons, but most of them, like you, could benefit by considering these actions:

Establish your own retirement plan. When you're a full-time employee, your employer may offer a 401(k) or similar retirement plan. But as a gig worker, you need to save for your own retirement. Fortunately, you've got a lot of attractive options. Depending on your circumstances, you might be able to open a SEP-IRA or even a "solo" or "owner-only" 401(k), which offers many of the same features of an employer-sponsored 401(k). Both these plans allow you to make pre-tax contributions, which can lower your taxable income. Plus, your earnings can grow on a tax-deferred basis. (Keep in mind that taxes will be due upon withdrawal, and any withdrawals you make before you turn 59 1/2 may be subject to a 10 percent IRS penalty.)

Create an emergency fund. Working in the gig economy can bring rewards and risks. And one of those risks is unpredictable – and often uneven – cash flow. This can be a cause for concern during times when you face a large unexpected expense, such as a major car repair or medical bill. To avoid dipping in to your long-term investments to pay for these costs, you should establish an emergency fund containing at least six months' worth of living expenses, with the money kept in a liquid, low-risk account.



Address your protection needs. Many companies provide some life insurance as a benefit to their employees, though the coverage is often inadequate. But, as is the case with your retirement plan, you will need to meet your own protection needs if you work in the gig economy. In addition to purchasing enough life insurance to protect your family, you also may want to consider disability insurance. A financial professional can help you determine what types of coverage, and how much, you require.

Keep track of your expenses. If you do your gig work out of your home, you may be able to deduct some of your expenses – phone lines, utilities, internet, newspapers, equipment, mileage and so on – from your taxes. Consequently, you will need to track all these costs. And you will need to consult with your tax advisor on what can, and can’t, be claimed as a business necessity.

These aren't the only moves you may need to make as a gig worker – but they can help provide you with a steady path in a world in which you can’t always tell what lies around the corner.

This article was written by Edward Jones for use by your local Edward Jones financial advisor. Courtesy of Rob Adams, 71 Main Street, North Adams, MA 01247, 413-664-9253.. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. For more information, see EdwardJones.com.

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Estate Plans Can Help You Answer Questions About the Future

Submitted by Edward Jones

The word "estate" conjures images of great wealth, which may be one of the reasons so many people don't develop estate plans. After all, they're not rich, so why make the effort? In reality, though, if you have a family, you can probably benefit from estate planning, whatever your asset level. And you may well find that a comprehensive estate plan can help you answer some questions you may find unsettling – or even worrisome.

Here are a few of these questions:

* What will happen to my children?
With luck, you (and your co-parent, if you have one) will be alive and well at least until your children reach the age of majority (either 18 or 21, depending on where you live). Nonetheless, you don't want to take any chances, so, as part of your estate plans, you may want to name a guardian to take care of your children if you are not around. You also might want to name a conservator – sometimes called a "guardian of the estate" – to manage any assets your minor children might inherit.

* Will there be a fight over my assets? Without a solid estate plan in place, your assets could be subject to the time-consuming, expensive – and very public – probate process. During probate, your relatives and creditors can gain access to your records, and possibly even challenge your will. But with proper planning, you can maintain your privacy. As one possible element of an estate plan, a living trust allows your property to avoid probate and pass quickly to the beneficiaries you have named.

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