5 Tips for new gig workers

The gig economy has been on the rise for years, for better or for worse. The number of full-time freelancers in the U.S. grew from 28% in 2019 to 36% in 2020, according to the freelance marketplace Upwork. The pandemic may have accelerated the trend, but it’s not showing signs of slowing. In fact, it’s projected that by 2027, 86.5 million people will be freelancing in the United States. That’s half of the total U.S. workforce.1 For new gig workers, this transition can feel daunting, but here are a few things you can do to ease it.

Find your own lane

Gig work can be competitive in the best of times, and even more so when many new people are entering the gig economy, like today. To stand out, focus on selling a specific skill or talent that you possess and not everyone will have. For example, a graphic designer might market themself as a specialist in a particular program or technique, rather than simply searching for any design gigs on an online marketplace.

Start where you’re most familiar

Many employers who let go of full-time employees in 2020 will likely turn to gig workers to lower overhead — as they did during the 2008 recession, the dawn of the gig economy.2 This means that for a new gig worker, a great place to start looking for work is the very company you left. Reach out to existing contacts with your new pitch. Remember — one advantage of gig work is flexibility. If there was a part of your former job that you didn’t enjoy, you can specify that it isn’t part of your gig.

Don’t forget about taxes

Becoming a gig worker is a lot like starting a small business — especially as far as the U.S. government is concerned. For starters, as a gig worker, you’ll have to pay an additional 15.3% self-employment tax, covering Social Security and Medicare, because your employer will no longer automatically withhold this money from your paycheck.3 In addition, you will have to file taxes quarterly and pay an estimated payment each time. Experienced professionals recommend putting aside 20 to 25 percent of your income for taxes, and this is on top of any savings you’re putting aside.4

Protect yourself and your loved ones

In 2020, the federal government acknowledged the prominence of gig work by allowing gig workers to claim unemployment insurance benefits under the CARES Act. Despite this, gig work remains precarious in comparison to full-time jobs. If you’re new to gig work, layering in additional protection, such as disability insurance for income protection, can be critical. In addition, consider whole life insurance to help protect your family or loved ones with a death benefit — the guaranteed cash value of a whole life policy can also be an asset if you’re planning to build out your skillset by returning to school in the future or otherwise investing in additional training.5, 6, 7

Make a strategy

As an independent contractor, you’ll be responsible for your own job protections and retirement planning strategy. To accomplish this, a good first step is to write down a complete budget and financial strategy for your new gig lifestyle. Outline your projected expenses, estimated income and long-term financial goals, and specify what percentage of your income you’ll save and where you’ll put your savings.

For help creating a strategy for your gig work future, you can talk to a financial professional — they’ll be able to identify the protections you’ll need and the milestones you’ll want to hit. If you or someone you love is making the jump to gig work, planning for your financial future has never been more important.

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1 Why are so many people freelancing, Fast Company, 2022
2 Gig Workers Are Here to Stay. It’s Time to Give Them Benefits., Harvard Business Review, July 3, 2020.
3  Self Employment Tax, (Social Security and Medicare Taxes), IRS, 2022
4 Tax Dos And Don’ts For New Gig Workers, Forbes.com, January 31, 2020.
5 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.
6 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.
7 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 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.