It’s great being your own boss. But it might not be so hot having to worry — and save — for retirement on your own.
The self-employed have a flexible vision of retirement and the power to execute that vision. Most plan on working past 65, easing into the golden years or not quitting at all. Some, however, might not be preparing sufficiently for this last stage, according to a new report.
Titled “Retirement Preparations in a New Age of Self-Employment,” the study examines the retirement outlook of the self-employed in 15 countries spanning the Americas, Europe, Asia and Australia. It was paid for by the Transamerica Center for Retirement Studies and the Aegon Center for Longevity and Retirement and draws from Aegon’s Fifth Annual Retirement Readiness Survey.
Among the findings:
▪ Globally, as well as in the U.S., 69 percent of the self-employed imagine a flexible transition into retirement, with many of them citing positive reasons such as staying active or enjoying what they do.
▪ 40 percent expect to retire after age 65 or never, while 56 percent of Americans expect to work longer.
▪ 60 percent have a retirement strategy, but only 13 percent have bothered to write it down. In the U.S., 20 percent do.
▪ 38 percent — 39 percent in the U.S. — have a backup plan in case they need to stop working before they planned.
▪ 34 percent say they always make sure they are saving for retirement. Thirty-six percent of self-employed Americans are habitual savers.
▪ 86 percent in the U.S. feel personally responsible for making sure they have sufficient income in retirement, well above the global average of 75 percent.
▪ 26 percent are very or extremely confident they will be able to retire in a lifestyle they consider comfortable, compared to 25 percent in the U.S. That’s only slightly higher than the 22 percent of all employees working for others.
“The self-employed face unique challenges in terms of saving and planning for retirement, such as irregular incomes and a lack of access to employer-sponsored retirement benefits,” Catherine Collinson, executive director of the Aegon Center for Longevity and Retirement and president of Transamerica Center for Retirement Studies, said in a statement. “For the self-employed, preparing for retirement requires a long-term do-it-yourself approach which many are not undertaking.”
The self-employed have a variety of options in which to park their retirement savings, including an Individual Retirement Account(IRA), Simplified Employee Pension Plan (SEP) IRA, Individual 401-k, an annuity and more. In 2015, the myRA also was introduced for those without access to employer-sponsored savings, and certain trade associations also provide plans covering.
In the U.S., 6.5 percent of workers are self-employed and the majority — 61 percent — are men. The median personal income is $46,000.