The latest monthly employment report from the Bureau of Labor Statistics showed that there were 7.619 million multiple jobholders in the United States in June. That is well above the cycle lows and comparable to levels seen during the past few recessions. For many of these Americans taking on a second job is a natural response to a relatively tight labor market that is still suffering from sluggish wage growth. An increased willingness to find a side gig is also not too surprising since a new Bankrate poll estimated that multiple jobholders on average earn an extra $686 per month from their secondary form of employment.
Millennials are more likely than members of other generations to say they have a side gig, and many young adults may be using that additional $8,232 in annual income to build a retirement fund. For example, an earlier Capital Group study found that 59 percent of Millennials began setting money aside for retirement before their 25th birthday, much better than the 42 percent of Gen-Xers and 28 percent of Baby Boomers who reported doing the same. A quarter of Gen-Y respondents also said that they believe “children born today should start saving for retirement even before their 18th birthday.” Despite the constructive attitude and behavior, many Millennials may still not be saving enough for retirement given the myriad of financial challenges this age group will likely have to overcome, e.g. ballooning healthcare expenses, lower Social Security payouts, greater long-term care needs, etc.
NerdWallet even estimated that a hypothetical 25-year-old earning $40,000 a year will need to set aside anywhere from 13 percent to as much as 22 percent of his or her annual income each year prior to retirement just to be able to achieve an income replacement rate of 80 percent. The latter is well above the more traditional recommendations for what should be contributed annually to a retirement account. It is therefore clear that young adults should start early with their saving and strive to set as much money aside each year as possible. Doing so can help them avoid the need to continue to hold multiple jobs later in life in order to shore up their old-age savings prior to retirement, which sadly is probably the case for the roughly one in five workers ages 55 and older in a CareerBuilder survey who said that they currently have more than one job.
Sources: Bankrate, Capital Group, NerdWallet, CNBC, CareerBuilderPost author: Charles Couch