How seniors are tapping the gig economy
It’s no secret that many boomers approaching their retirement years are anxious about having enough income. But many are finding help -- by turning to the so-called gig economy.
In the past few years, my wife and I have met several seniors who make money in this 21st century way, and all seem happy with the arrangement. One was an Uber driver who was a retired airline stewardess, spoke several languages and drove passengers to and from airports. During the drive, she shared valuable insights into travel and dealing with airlines.
Another situation involved a retired empty-nest couple who rented a temporary room to our daughter just after she graduated from college. It gave the couple some extra money and companionship, and we appreciated having these life-experienced adults sharing insights with our daughter.
These gig-economy seniors have plenty of company. According to a recent study by the JPMorgan Chase Institute (JPM), roughly 1 percent of seniors -- more than 400,000 nationally -- are earning money this way.
The researchers used “big data” techniques to study the financial lives of seniors by analyzing data on millions of anonymized Chase customers. Although the absolute numbers are still small, researchers found that more seniors are supplementing their income by participating in the “online platform,” or gig economy.
The gig economy can be particularly attractive to seniors because it permits flexible work and allows people to generate income from accumulated assets. The report distinguishes between labor and capital platforms. Labor platforms, such as Uber or TaskRabbit, connect customers with freelancers who perform specific tasks or assignments. Capital platforms, such as eBay (EBAY) or Airbnb, connect customers with people who rent their assets or sell goods peer-to-peer.
For seniors, these earnings can be a substantial supplement to their retirement income. Those who were established participants in labor platforms earned on average more than one-fourth (28 percent) of their total income this way. Seniors who were established participants in capital platforms earned an average of 11.5 percent of their income from those platforms.
For example, 24 percent of all Uber drivers are over age 50, and 3 percent report being formerly retired. Similarly, Bloomberg reports that people age 60-plus are the fastest-growing and best-reviewed age group on Airbnb. DogVacay, which connects pet sitters with owners, reports that people over the age of 50 constitute 25 percent of sitters.
The JPMorgan Chase Institute reports that seniors earn about 25 percent of their income from working and that this share may rise in the future. It found the percent of seniors in the work force has been increasing recently, from 20.7 percent in 2009 to 23.1 percent in 2015. The institute anticipates that much of the anticipated rise will come from the gig economy.
Of course, earning income in the gig economy has some downsides. Most of the time, workers are considered contractors and are responsible for paying their own taxes. In addition, the income can be quite unpredictable. However, these drawbacks may be an acceptable trade-off to earning additional spending money to supplement Social Security and other retirement income.
While online platforms are very useful for connecting people, you don’t necessarily need to resort to this new technology to make money -- you can use old-fashioned networking and referrals. For example, a retiree we know (and recommended by neighbors) takes care of our plants when we travel. And we know several freelancers and consultants who find their work through old-fashioned connections.
All of these examples share a common theme: seniors taking advantage of life-long skills, connections and assets to earn extra spending money in their retirement years. In the process, they’re staying engaged, meeting people and having fun in the process. That’s a winning combination.