What pre-retirees can gain from a job without benefits
Despite a lack of benefits, nontraditional jobs may boost retirement security
Workers also contributing less to retirement funds; Fox Biz Flash: 5/27.
The coronavirus-induced financial crisis is changing the retirement landscape for many, including pre-retirees who may need to adjust their plans to account for an unexpected shock to their savings accounts.
One way older workers who are underprepared for retirement may considering bolstering their finances? Picking up a nontraditional job, or employment that provides neither health nor retirement benefits, according to a study conducted by The Center for Retirement Research at Boston College.
Typically, these positions are considered undesirable for older Americans because it leaves them vulnerable to unexpected health care expenses and does not give them an option to stash money away in an employer-sponsored retirement account.
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However, researchers noted that nontraditional employment is often a better option for pre-retirees because it can help them prolong their careers. Working longer can strengthen Social Security benefits if you are able to delay the age when you claim. Researchers also said holding a nontraditional job may help delay the age when people tap into their retirement accounts, like 401(k)s.
Workers aged 62 through 68 who engaged in nontraditional jobs, who were also unprepared for retirement, were able to increase their savings by a comparable amount to those who held traditional positions, the study showed.
“Those who engage in nontraditional work end up increasing their retirement security by substantially more than those who do not work after age 62, and by at least as much as those who stay in traditional jobs,” researchers said.
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There has been an ongoing retirement crisis in the U.S.; prior to the pandemic, research indicated about half of working-age households in the U.S. were at risk of not being able to sustain their lifestyle throughout their retirement years.
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Meanwhile, new, weekly unemployment claims continue to come in around 1.5 million with more than 50 million new claims filed since mid-March. Filings have exceeded 1 million for 15 consecutive weeks. The unemployment rate exceeded 11 percent in June and is expected to tick higher in July.
And one-third of the U.S. labor force is 50 or older and 5 million people in that demographic work in retail, an industry that was hit hard by lockdown measures, according to data from the AARP. Another 1 million work in food services.
Experts have recommended picking up a job in the gig economy as a way for older people to live a more secure lifestyle in retirement.