Financial hacks for the gig economy

-5 MIN READ | #blog

Are you part of the gig economy, or is that world still new to you? The fact is that it’s a force to be reckoned with. The gig economy experienced 33% growth in 2020, and is expanding much faster than the U.S. economy as a whole. About 2 million new gig workers emerged in the U.S. in 2020 alone. Today, 35% of U.S. workers are involved in the on-demand gig economy.1

There are many reasons that gig work has become increasingly popular, and most have to do with flexibility: you can be your own boss, set your own hours and rates of pay, enhance your work-life balance, and work on the projects that you love. It can also be a way to supplement your current income if you’re not ready to take the plunge and become a full-time gig worker.

Gigging may be great for flexibility and work-life balance, but it also means that a full-time gigger won’t have access to many of the benefits that a full-time employee has. So how can you make the gig economy work for you?

Be protection-minded

Most people are aware of the importance of health insurance to cover injuries or sickness. But there are additional types of insurance — namely disability and whole life insurance — that can further guard against financial disaster.

Disability insurance, which can be thought of as income protection, can make up for a gap in income due to an illness or accident. Often people think, “Oh, that will never happen to me,” but unfortunately, about one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach normal retirement age.2

Whole life insurance is another important form of protection, particularly for gig workers. With a whole life policy in place, your family will receive financial support in the event of your death.3 Yet even before it offers this ultimate security, you can use the cash value accrued in your whole life policy to fund life improvements today, such as returning to school or financing a business.4 It’s easy to imagine how gig workers could benefit from using this income to expand their skills, or grow from gig work to starting a small business.

Save for retirement

Opportunities to earn in the gig economy are immensely varied and you can use gig work to follow a long-held dream while making an income. Yet, whether you earn through photography assignments or building furniture, the day may come when you’ll want to slow down the pace. Gig workers do not have the benefits of an employer-sponsored 401K, so it’s essential to begin your own retirement savings as soon as possible. This can be through a traditional IRA (individual retirement account) or a Roth IRA, and a financial professional can help guide decisions around how much to save and how to invest.

Typically, workers can write-off contributions to their traditional IRA in their yearly taxes.This is appealing to people who want to lower their immediate tax burden. With a Roth IRA, you won’t get the benefit of lower taxes today; however, when you retire, you won’t have to pay taxes on the money you withdraw after a certain age.

You are now a business

When you earn income through the gig economy, you become your own micro-business. We’re used to thinking about the different departments in larger companies — like the finance or human resources departments — but now, you need to master these disciplines for yourself. For instance, you’ll want to become proficient at budgeting, managing cash flow, business planning, and possibly hiring workers to help you with big projects. As you develop your income in this new economy, it pays to be curious. You’ll be both an expert in your trade and a student of all there is to learn about running your own business.

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2 Social Security Administration, Disability and Death Probability Tables for Insured Workers Born
in 1999, Table A.

3 All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims-paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.

4 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

5 Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.


The Guardian Network® is a network of preferred providers authorized to offer products of The Guardian Life Insurance Company of America (Guardian), New York, NY and its subsidiaries. This material is intended for general public use. By providing this content, The Guardian Life Insurance Company of America, and their affiliates and subsidiaries are not undertaking to provide advice or recommendations for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial representative for guidance and information that is specific to your individual situation.