Saving for retirement in the gig economy

Saving for retirement in the new economic reality will be hard. The new “gig economy” consists of freelancers, part-time workers, independent contractors, and the self-employed. It’s estimated that more than 40 percent of workers are no longer salaried employees and that this percentage will continue to grow.

These people will be solely responsible for their own retirement and financial well-being, if we don’t provide easy digital tools for savings, we could be looking at a generation of workers struggling to achieve financial security in retirement.

Apple Pay and Amazon’s one-click buying are examples of digital tools that have made it easier than ever to spend money. With tools like Robo-savings apps, the goal is to make saving money just as easy.

Another example is to provide just in time feedback to your mobile device. Apps that track your investment performance and spending habits can have a huge impact on your behaviour. Users of a U.S.-based app called Personal Capital decreased their spending by 15.7 percent. Most of that decrease came from discretionary spending, with users spending less on categories like dining out.

Results from government surveys support this behaviour. The majority of consumers with access to their financial information on mobile phones check their balances before making large purchases, and of those who check, 50 percent decide not to buy an item because of the feedback.

When I was teaching, one course I taught was financial literacy. A major issue with teaching financial literacy in school is that students can’t apply the concepts they learn until many months or years later. One study found that, like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behaviour 20 months or more from the time of intervention.

Using technology and apps that provide just-in-time financial information perhaps can solve this timing issue, providing people with crucial information when they need it the most.