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Gig Economy: What if you lose your job during COVID?

During COVID-19, millions of pre-retirees have lost jobs that may not come back. This major force has led to early retirement and to the gig economy as a supplemental stream of income. What you need to think about are factors such as taxes, financial planning, savings for retirement.

What if I suddenly lose my job?

On April 15th, 2020 I received a phone call from a client. I could feel the anxiety and despair in her voice as she said, “Chelsea, I was laid off last week.” We’ve heard it happen to thousands of Americans across the country, including friends and family. But we always hope that it won’t happen to us. She was six years from retirement. How was she going to find a new job during a pandemic? Will her industry survive this crisis?

During COVID-19, millions of pre-retirees have lost jobs that may not come back. This major force has led to early retirement and to the gig economy as a supplemental stream of income. This is where part-time jobs, freelance work, and other temporary employment become an attractive option.

While you might assume that this network consists primarily of millennials and younger individuals, retirees make up a larger portion each year. According to Kiplinger, prior to COVID-19, more than 400,000 seniors were finding gig work online in order to utilize their time, and wealth, properly.1 If you’re a part of this group of individuals, you may consider a variety of gigs including teaching a foreign language online, substitute teaching, renting out space for travelers or vacationers, seasonal work, or even pet-sitting locally.

Before You Start….Before You Start….

Ask Yourself If You’re Ready

After discovering your new chapter as a retiree, making a commitment to working again can take a lot of hard work and possible uncertainty. While being dependent on the gig economy might not be for you because income can fluctuate so much, it can be a great way to spend some time doing something you’re passionate about or discovering a new interest.

Set Your Goals

As you consider taking on gig work, it’s important to set reasonable expectations and goals for yourself by doing research in areas that interest you. Keeping in mind your earnings potential as well as the challenges you may encounter along the way are also key to succeeding in the long run. While getting started can be relatively simple, it may take some time to maximize your potential and in turn, your income in whatever platform you turn to for your work.

Talk to Your Advisor

When it comes to picking up gigs, it’s important to emphasize whether you’re reliant on the income you will receive or if you’re in it for the passion and excitement that can coincide with the income.

If you are in fact choosing to work again because of your financial situation, it’s important to talk to your advisor to understand where you are and what you’ll need to earn in order to live confidently. Your financial advisor can help you determine how to utilize your wealth in the most beneficial way to continue the lifestyle you’ve worked so hard to achieve.

Build Your Brand

In any industry it is important to take the time to build a name for yourself and network properly so that you can find success. As a retiree, this is equally important whether you’re doing something out of passion or necessity. Depending on your industry, you can get started on one platform initially and expand slowly so that your audience can grow with you.

Don’t Forget About Taxes

By making it this far you know that taxes can be difficult! It’s important to keep in mind the details when it comes to working for yourself. You’ll need to deduct quarterly, setting enough aside to cover self-employment tax and income tax. You will also need to file an annual tax return unless you’re earning less than $400 a year.2

The IRS website provides more information about this.

Your accountant, or trusted advisor, can always be helpful when it comes to taxes, whether you’re working for yourself or not. Additionally, there are a number of software capabilities available to help as well.

1 Retirees, Survive and Thrive in the Gig Economy

2 Self-Employed Individuals Tax Center

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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