Editors' pick: Originally published Sept. 9
It is estimated that 40% of the U.S. workforce will be freelancers by the year 2020 and recent reports have shown that nearly 70% of current so-called 1099 workers have no long-term savings at all.
Those numbers should have alarm bells sounding, said Nathan Fisher, managing director of 401(k) solutions at Fisher Investments.
"It's a tremendous problem" said Fisher. "In America we are not helping workers get on track and stay on track for a comfortable retirement. And the gig economy is going to make it worse. People don't know how or where to save."
Additionally, Fisher said many of these freelancers are millennials who, contrary to popular belief, really do care about saving for retirement, but are facing some significant barriers to entry like student loan debt. This raises new challenges both for workers and their employers.
"The gig economy is great for millennials who want more options, but it makes retirement savings harder," said Fisher.
In Fisher's view, the financial industry as a whole isn't providing the kind of tailored service these individuals need. Many service providers still use a one-size-fits-all approach that contains financial jargon and detailed descriptions of the fund menu that millennials can't relate to and that are irrelevant to some members of the gig economy.
One solution has been workplace plans that let employees set up automatic deductions to fund retirement. The lack of such plans in the gig economy may be growing into a bigger problem, according to Fisher.
"If we are talking to millennials, they are probably not thinking about their lives when they are in their sixties or seventies," said Fisher. "That's a big part of the conversation. We need to get them to focus on that first, then we can help them with specific plans and the best ways for them to save."