Think People Who Work For Themselves Have The Best Job In The World? Your Opinion Might Change After Reading This
Being self-employed may be a dream come true for some people but this career path isn’t a cakewalk at all. Proof of this is the findings of a recent study from the Transamerica Center for Retirement Studies (TCRS) pointing out a serious financial problem that many self-employed workers in the United States.
Issues with Saving
According to the institution, those who are working for themselves aren’t saving enough money to earn themselves a comfortable retirement in the future. In fact, only 55% of those surveyed in their research said that they are regularly set aside funds for when they retire.
Some 30%, meanwhile, reported that they only save money from ‘time to time’. One reason cited for this saving problem is that self-employed workers plan on working longer than their regularly employed peers. The survey was answered by around 6,000 Americans, 800 of whom identified themselves as self-employed.
The study also found that this segment of workers has a median household retirement fund of just $71,000. In comparison, households headed by the elderly (those 65 and above) already spend about $45,756 in just a year, according to the Bureau of Labor Statistics.
With this scenario, self-employed people’s retirement savings might only ferry them for two years when they stop working. To address this problem, those who work for themselves are recommended to set up an Individual Retirement Account (IRA), similar to a 401(k), which is established for workers by their employer.
The Self-Employed Demographic
Aside from the aforementioned findings, the TCRS report also painted a picture of the American self-employed population. This segment of the study showed how varied the work arrangements and demographic characteristics that those who are in business for themselves have. For example, the institution found that there are more men (63%) than women in the sector. More than half of the sector are also aged 50 and above.
Apart from their shortfall in savings, people who work for themselves will also have to worry about other risks. Although a whopping 70% of them expect to retire rather late or not even retire at all, their wishes may not go as planned. That is because unexpected events might lead them to have to retire much earlier than they expect.
In fact, this happens to four out of ten people. According to the Employee Benefit Research Institute, some of the most common causes of a forced early retirement are changes at work, health problems and developing a disability.
There are also those who leave work to be able to care for a spouse or another member of their family. Even more concerning is that self-employed people might suffer more as a result of these unforeseen scenarios as less than half of the have life insurance and even fewer have disability insurance.
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