What Does Underemployment Mean for Retirement?
Economists and others regularly bicker over whether the unemployment numbers are better or worse in 2017 than they have been in recent years, but many do agree that the nation isn’t at full employment. That’s despite the fact that a March jobs report pegs unemployment at only 4.5 percent. Traditional unemployment figures do not count sidelined workers and those stuck with part-time positions when they would prefer full-time work. Adding these individuals causes the ranks of the unemployed to rise to over 14 million Americans.
Underemployment Leads to Sacrificing Retirement Savings
Part-time and underemployed workers tend to make less money than they would if working full time in jobs commensurate with their skill sets. As a result, they pay less into Social Security. If underemployment continues over the long term, it could substantially impact benefit amounts later. Families who are making ends meet on a part-time or underemployed paycheck might not have anything left over to save. They are unable to build a nest egg to offset uncertainties around Social Security.
The problem is not a new one. In 2013, the Transamerica Center for Retirement Studies estimated that underemployed individuals had managed to save on average only $7,500 for retirement. Even individuals in their 50s and nearing their retirement years had a median savings of approximately $16,400 — barely enough to live above the poverty line for a single year in retirement.
What Can Underemployed Individuals Do?
Underemployment is not a situation the nation arrived at overnight, and it’s not something that will be resolved in short order — though President Trump has repeatedly stated he plans to work on it. Meanwhile, individuals who find themselves in this situation must consider both today’s needs and tomorrow’s stability. Some ways underemployed individuals can combat retirement savings issues include:
- Working multiple part-time jobs or freelancing to boost income, ensuring there is something left over to invest or save.
- Taking time to learn new skills to become more valuable in the job marketplace.
- Educating themselves about stable investment options to ensure long-term returns on the money they save.
- Investing in Gold IRAs, which are likely to perform positively regardless of economic pressures or how the job market might change in upcoming years.