Last month, we moved and I spent a lot of time fixing up our old condo. It was in good shape overall, but it needed some cosmetic fixes like painting, caulking, and patching. At first, I was going to hire a painter to paint the interior, but the estimate gave me sticker shock. They wanted $1,800 to paint a small 2 bedroom condo. I couldn’t bring myself to pay that much so I decided to paint the place myself. My wife suggested that we hire someone from TaskRabbit to help out. That sounded good to me so we reserved a 4-hour appointment to see if it’d work out. Unfortunately, it snowed that day and the city shut down. Our gig worker couldn’t come because his van can’t handle the snow. Luckily, I already made good progress in the previous days. I was able to finish off the interior painting without help in a couple more sessions. It took about 25 hours total, but that was way better than spending $1,800. That’s more than I make in 2 weeks. I feel bad for the gig worker, but that’s how the ball bounces in the Gig Economy.
The growing Gig Economy
While I was painting, I listened to NPR on the radio and heard several stories about the Gig Economy. Apparently, it’s huge now. A 2018 report from Gallup Poll found that 36% of all U.S. workers participated in the Gig Economy in some capacity. That’s about 57 million people! Their definition of gig worker is very broad, though. Basically, a gig includes anything that’s not a traditional job. Here is the categorical breakdown.
- Online platform workers – Uber, TaskRabbit, Fiverr, and other online platforms. This is what I think of when I hear “Gig Economy.” However, this is just a small portion of it.
- Contract firm workers – Employees who work for a firm that provide services to another company. Janitorial service, sales, writing code, and such. Contract workers outnumber regular employees at Google now.
- On-call workers – People who work on an as-needed basis. A substitute teacher, for example.
- Temporary workers – Workers from a temp agency.
- Independent contractors – People who provide goods and services to another person. Many small businesses fall under this category. I needed some help sprucing up the bathrooms at the old condo and I called my handyman. He’s an independent contractor.
The 36% includes people with a traditional job who are hustling on the side to make extra income.
Ok, let’s take a little poll.
The Gig Economy and retirement
One interesting finding in the report is that baby boomers participate in the Gig Economy at higher rates that GenXers and Millennials.
- Baby boomers – about one in three have a gig.
- Gen Xers – 27%
- Millennials – 26%
It looks like the boomers are turning to the Gig Economy to help facilitate a smoother retirement. I think that is a great idea. A gig can bring in some income and you get a chance to socialize. Why not?
My handyman, Ted, is a young baby boomer. He has rentals, a much nicer house than ours, and he works 4 hours per day max. I doubt Ted really needs the money, but even a little active income goes a long way in retirement. Going out to work a bit keeps him busy and he can socialize with other people. I’m sure his wife is happy to have him out of the house once in a while. It was fun talking to him about all sorts of stuff. I enjoyed spending time with him. Ted is doing it right.
The Gig Economy and financial independence
I’m a part of the Gig Economy too. Retire by 40 generates income from advertising through various online platforms like Amazon and AdThrive. I also occasionally participate in consumer surveys and market researches. After 9 years in the Gig Economy, I’m very happy with it. It helped me reach financial independence and gave me the peace of mind to retire early.
How I pulled this off?
Back in 2010, I was very dissatisfied with my engineering career. My physical and mental health were deteriorating rapidly. I couldn’t handle being a corporate drone anymore. I knew I had to get out. Luckily, I discovered blogging and dove right into it.
After some research, I found the key to early retirement is financial independence. One way to define that is having 25x our annual expense. We achieved it relatively quickly by cutting expenses and raising our income. I have been saving and investing since 1996 and we were already pretty frugal. By 2012, we had over 30x our annual expense. However, this wasn’t enough. Most of our investments are in the tax deferred accounts. I could access my IRA via the Roth IRA ladder, but we weren’t quite ready to do that. Mrs. RB40 enjoyed her job and she didn’t want to retire at that time.
Instead, I came up with our unusual early retirement withdrawal strategy. Instead of drawing down from our retirement fund right away, we will fund our lifestyle with a combination of passive and active income. From what I recall, I only needed to make $500 per month from blogging to cover the rest of our monthly expense. We left our investment alone so it had time to grow. And grew it did. Our net worth doubled since I retired in 2012 thanks to the strong stock market. I’m quite happy I joined the gig economy.
The Gig Economy can be tough
The Gig Economy isn’t all roses, though. I heard some horror stories on NPR. One gig worker was propositioned to join a threesome by the couple she was cooking for. Yuk! Nobody wants to deal with that.
Also, it sounds really difficult to support yourself solely with gigs. If I don’t have passive income, I’d be hard press to live on my online income alone. Most gigs don’t come with health care, paid time off, worker comp, unemployment benefit, life insurance, or retirement benefits. It’s tough to support yourself with just gigs.
It seems the Gig Economy is great for only a few cases.
- Supplemental income – You join the Gig Economy to supplement your income. You can survive without it. This gives you a lot of choices. The worker can pick a job they excel at and become better at it.
- Specialization – A skilled gig worker can make six figures if they specialize in something that’s in demand. For example, a steady cam operator can make good money in the right city.
- Independent contractors – The Gallup poll found that independent contractors are quite happy with their work. Temp workers, on-call workers, and contract workers aren’t as engaged. This makes sense. Independent contractors have more choices. They can do something they like and work at their own pace.
- Survival – Depending on the Gig Economy to survive probably isn’t good. Many gigs don’t pay very much and have no benefits.
- Distraction – A gig could distract you from your career. Usually, the best way to increase income is to get a raise at your main job. Working a traditional job and gigs on the side will wear you out in the long run. It’s probably better to focus on your career and acquire more skills to improve your income there.
- Unskilled gigs – IMO, working in unskilled gigs is a bad idea. You’re competing with so many people. If anyone can do this job, you won’t make much.
The Gig Economy helped me retire earlier
In conclusion, the Gig Economy helped me to retire earlier. If I depended on passive income alone to retire early, I’d probably had to keep working for 3-5 more years. Now, I work a few hours per day on something I enjoy and I don’t have to deal with any corporate BS. This is what FIRE is all about. If I can keep this up for 5 more years, we’d be set for a very comfortable retirement. Our investment should grow enough to accommodate a very comfortable retirement. FatFIRE, here we come!
Are you a part of the Gig Economy? What do you think about it? Is it helping you reach financial independence and early retirement?
Starting a blog is a great way to save money on your therapy bill, build your brand, and generate some extra income. Check out my tutorial if you’re thinking about blogging – How to Start A Blog and Why You Should.
Joe left his engineering career behind to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle. See how he generates Passive Income here.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.
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