The nontraditional workforce of freelance, contract and gig workers has grown during the pandemic. Although this workforce enjoys such benefits as flexible schedules and the ability to work from home, saving for retirement can be more challenging than for traditional employees.
To help understand nontraditional workers’ access to retirement savings plans, the barriers they face to saving and possible solutions, The Pew Charitable Trusts in 2020 surveyed 1,000 workers who said they did nontraditional work.
Only 22 percent of the survey’s nontraditional workers participated in a defined contribution plan at their current workplace during the year leading up to the survey. The many workers without employer-provided retirement plans risk entering retirement without adequate savings, or they may be unable to retire.
But workers in a marriage or partnership may be able to save for retirement even if they do not have a retirement plan at their own job.
As an example, one member in a household might work in traditional employment with retirement and other benefits while the other member follows an entrepreneurial path that doesn’t offer employer-provided benefits.
Thus, a spouse or partner’s job can be a potential point of access to a workplace retirement savings for the whole household.
Do coupled relationships reduce the retirement plan access gap for nontraditional workers? According to survey results:
Access lacking. Just one in four nontraditional workers had access to retirement benefits through a partner or spouse. Fifty-six percent of nontraditional workers were married or living with a partner, and half of these coupled workers had a spouse or partner whose workplace offered a traditional defined benefit, DC or other type of retirement plan, such as an annuity.
Thanks to a spouse or partner’s workplace plan, overall access to a workplace plan increased by 12 percentage points among all (coupled and single) nontraditional workers, from 46 percent to 58 percent. A large proportion of spouses and partners take advantage of this access: 83 percent saved in a DC plan and 72 percent participated in a DB plan, when offered.
Lack of coordination. Just one in four married or partnered contingent workers without their own workplace plans reported that they had figured out what they need for a secure retirement and coordinate with their spouse or partner to save accordingly.
Ten percent of coupled respondents said they don’t know whether their spouse or partner had a retirement plan, a likely marker of low coordination within a household.
Spouse’s plan not a solution. Coordination by couples may improve access and retirement savings for some, but it is unlikely to provide a solution for all or even most nontraditional workers, given that nearly half are uncoupled and even among coupled workers, the increase to access is relatively low and coordination among spouses and partners is poor.
Access to a workplace retirement savings plan through a spouse or partner’s job may allow some workers to save additional amounts or even to save enough for a secure retirement. But this likely is not a viable strategy for most nontraditional workers, only 56 percent of whom are married or living with a partner.
Overall access to a retirement plan increases by just 12 percent, looking across all nontraditional workers, coupled and uncoupled, when spousal or partner access is included.
Couples in which one partner has access to a workplace plan may coordinate to save additional amounts. Unfortunately, the survey results suggest that less than half of coupled nontraditional workers are coordinating with their spouse or partner to save more or enough for a secure retirement.
“In sum, access to retirement savings through a spouse or partner’s plan will not be enough to ensure retirement security for the many nontraditional workers who lack their own workplace retirement plans,” the survey report concluded.
“This finding is further evidence that nontraditional workers need a variety of solutions that provide retirement savings opportunities directly and efficiently to all workers. If given the opportunity, many workers will save.”