In today’s world, the gig economy has made it possible for people to live comfortably on part-time jobs. And overall, this is good; people these days have a lot more options when it comes to making money. But this also brings some problems along with it, which can end up being quite severe if you’re not prepared. For one, saving up for your retirement is much different if you purely live off of part-time jobs. Of course, the main difference is that you don’t have the benefits people with full-time jobs do. This means you have to be smarter overall in your approach to saving. In order to help you out, we’ve put together a guide on how to save for retirement when you work part-time.
Work multiple part-time jobs
First up on the guide on how to save for retirement when you work part-time is to work multiple part-time jobs. After all, it’s easier to save money when you’re making more money, no matter how you look at it. And, whether it’s because of fewer hours or lower pay rates in general, part-time jobs have limited income potential. So, instead of settling for just one, take on as many part-time jobs as you realistically can. You’ll have much more income to spend on yourself and save up for the future. Of course, when working exclusively part-time jobs, you need to prepare yourself to face unemployment. This is because employers tend to care less about their part-time workers than their full-time employees. So, if they ever need to let someone go, the part-time workers are always the first to go.
Open a retirement account
The main drawback of working only part-time jobs is that you don’t have access to a workplace 401 (k) plan. And Social Security isn’t meant to pay for someone’s retirement in full, so you’ll need to plan for that. In essence, you must be disciplined and start your retirement account to prepare yourself. The best option is to create a traditional IRA, which offers instant tax deductions for your contributions. Another option is to start a Roth IRA, with which you can make tax-free withdrawals when you retire. You’ll have to be disciplined and ensure you properly handle this account to successfully save up for your retirement. It’s worth taking a look at the best U.S. cities to retire in, as they’re great places to settle down, as this is also an excellent time to start considering where you’re going to retire.
Make a Health Savings Account (HSA)
When you want to save for retirement, one of the biggest worries should be healthcare. Health Savings Accounts are good for a lot of reasons, which makes them vital. You’ll need to look into the eligibility of HSAs where you live, as it can vary from place to place, but part-time workers are generally eligible for them. The main benefit of an HSA is that they allow you to put away tax-deductible money for healthcare purposes. The money in your account rolls into the next year and is completely tax-free. Any cash which is withdrawn specifically for healthcare isn’t subjected to cash, and when you reach the age of 65, you can freely withdraw money for any reason, and you’ll only have to pay income tax on the distribution. However, an HSA won’t be enough to solve your financial problems in the long run, so prepare well.
Claim your Social Security at the right time
Social Security can be a big boost for any part-time worker when retiring. This is because every year you continue working past your full retirement age, you get an 8% boost to the benefit amount up until age 70. You can cover many expenses by getting this total amount at age 70. However, whether or not someone can continue working until 70 is highly variable. As such, there isn’t a good answer for when the best time is to claim this benefit. We recommend talking to a retirement planner to figure out what would be the best choice for you. Additionally, you’ll want to start searching for a home to retire in relatively early. Condos are a great choice, but keep an eye out for red flags when looking into potential condos you want to settle in.
Maintain realistic expectations for your retirement
It would help if you were diligent about planning for your retirement. This is the same for full-time workers, but part-time workers have an advantage here. When working only part-time jobs, you need to focus on planning your life around spending less money. This can help a lot when retiring, as your income will become fixed, and you, much like before, won’t have much disposable income. On the other hand, full-time workers have to adjust to having less money to work with. However, when it comes to keeping your expectation realistic, we recommend talking to a retirement planner and calculating the ideal income, so you don’t have to stretch your resources in retirement. Remember, planning is critical to your retirement, so you should be extremely careful when making plans.
How to save for retirement when you work part-time – closing thoughts
Working exclusively part-time jobs doesn’t have to mean your retirement isn’t comfortable. It comes down to properly planning everything and preparing yourself properly for when the time comes to retire. After all, today’s gig economy is very friendly, and you can easily make sure you can save up plenty of money for your retirement. So, take the time to plan everything out and speak with a professional retirement planner to help out where needed. We hope that this guide on how to save for retirement when you work part-time helps you out, and we wish you a good day.