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America's backup retirement plan: Keep working

CBS News logo CBS News 5/17/2018 Kathy Kristof

America's backup retirement plan is, well, work. 

More than one in three American workers are using the gig economy to find full- or part-time work, and for roughly one-third of that group, the side gig is specifically aimed at increasing their retirement savings, according to a new study by financial advisory firm Betterment.

Perhaps not surprisingly, the older the worker, the more likely the side gig is aimed at building that retirement nest egg. Just 42 percent of those under the age of 35 said they were taking side gigs to save for retirement, while 76 percent of those who were 55 or older cited retirement savings as their primary motivation.

A significant number of side hustlers don't expect to stop working when they hit retirement age, either. Between one-fifth and one-sixth of those who have taken on second jobs said they'd keep the side gig after normal retirement age, figuring that it would serve as their primary form of income.

Why are so many Americans having to work side jobs to catch up on retirement savings? Largely because they were too indebted to make saving a priority, according to the survey. A whopping 72 percent of those who picked up side hustles in addition to a regular full-time job said they were doing it to pay off debt. Of this group, 16 percent held more than $50,000 in debt on credit cards and student loans.

The survey results come as no surprise to Richard Eisenberg, managing editor of Next Avenue, a news site geared for readers who are age 50 and over.

"Side hustles are becoming a way for people to fund retirement because they let people earn money based on what they can do and what they like to do," he said. "For some people, that's easier than saving."

Discomfort with investing may also play into the trend, Eisenberg added. With fixed-income investments offering such low returns, retirees have had to invest in stocks. But having lived through multiple market reversals, this demographic is better aware than most that nothing about stock returns is guaranteed. Working, on the other hand, is a sure thing.

Notably, Americans have long harbored the notion that they were going to work well into retirement age, according to an annual survey by the Employee Benefit Research Institute. However, these expectations largely prove false. Back in 1998, about 56 percent of workers said they expected to work in retirement, but only 22 percent of retirees were actually working. Today, 68 percent expect to work in retirement, but just 26 percent are receiving pay for work after they've retired, according to EBRI.

"We are not seeing a giant trend of people in their 50s and 60s rushing to drive for Uber or take some other gig," says Eisenberg. "The numbers are still fairly small. But they're growing and they are likely to keep growing."

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