For Workers Over 50, a Job Without Benefits Spells Long-Term Trouble

When the retirement expert Alicia H. Munnell finished gathering data for a study on American workers ages 50 to 62 in jobs without benefits, she was stunned.

“When I looked at the results I thought, ‘This can’t be right,’” Dr. Munnell, director of the Center for Retirement Research at Boston College, said. The study, published in October and titled “How Do Older Workers Use Nontraditional Jobs?,” found that three-quarters of American workers in that age group had positions that fall into the center’s “nontraditional” category — meaning, those without employer-provided retirement plans and health insurance.

Freelancers and consultants of all stripes can fit that definition. So can waiters, artists, yoga instructors and anyone who works part time or whose income is generated by the gig economy (including Lyft or Uber drivers and DoorDash couriers).

“I thought everyone had traditional jobs during their 50s,” Dr. Munnell said. “I was super surprised by it.”

What may be less surprising is the effect these jobs can have on retirement. Depending on how much time workers spent in a job without benefits from ages 50 to 62, they can expect their retirement income to be as much as 26 percent lower than that of people who spent their 50s and early 60s in positions with full benefit packages, according to the center’s findings. It was the first time the center had looked at nontraditional workers in this age group.

Some of these workers, like Mary Jacobs, are somewhat insulated.

Ms. Jacobs is a freelance writer for various outlets, including The Dallas Morning News. Since the coronavirus hit, she has been especially busy.

“One of the subjects I specialize in is seniors, and that’s a demographic that’s really in need of Covid content,” Ms. Jacobs said from her home office in Plano, Texas. “I’ve been doing a lot of writing about the pandemic.”

#styln-briefing-block {
font-family: nyt-franklin,helvetica,arial,sans-serif;
background-color: #F3F3F3;
padding: 20px;
margin: 37px auto;
border-radius: 5px;
color: #121212;
box-sizing: border-box;
width: calc(100% – 40px);
}

#styln-briefing-block a {
color: #121212;
}

#styln-briefing-block a.briefing-block-link {
color: #121212;
border-bottom: 1px solid #cccccc;
font-size: 0.9375rem;
line-height: 1.375rem;
}

#styln-briefing-block a.briefing-block-link:hover {
border-bottom: none;
}

#styln-briefing-block .briefing-block-bullet::before {
content: ‘•’;
margin-right: 7px;
color: #333;
font-size: 12px;
margin-left: -13px;
top: -2px;
position: relative;
}

#styln-briefing-block .briefing-block-bullet:not(:last-child) {
margin-bottom: 0.75em;
}

#styln-briefing-block .briefing-block-header {
font-weight: 700;
font-size: 16px;
line-height: 20px;
margin-bottom: 16px;
}

#styln-briefing-block .briefing-block-header a {
text-decoration: none;
color: #333;
}

#styln-briefing-block .briefing-block-footer {
font-size: 14px;
margin-top: 1.25em;
}

#styln-briefing-block .briefing-block-briefinglinks {
padding-top: 1em;
margin-top: 1.75em;
border-top: 1px solid #E2E2E3;
}

#styln-briefing-block .briefing-block-briefinglinks a {
font-weight: bold;
margin-right: 6px;
}

#styln-briefing-block .briefing-block-footer a {
border-bottom: 1px solid #ccc;
}

#styln-briefing-block .briefing-block-footer a:hover {
border-bottom: 1px solid transparent;
}

#styln-briefing-block .briefing-block-header {
border-bottom: none;
}

#styln-briefing-block .briefing-block-lb-items {
display: grid;
grid-template-columns: auto 1fr;
grid-column-gap: 20px;
grid-row-gap: 15px;
line-height: 1.2;
}

#styln-briefing-block .briefing-block-update-time a {
color: #999;
font-size: 12px;
}

#styln-briefing-block .briefing-block-update-time.active a {
color: #D0021B;
}

#styln-briefing-block .briefing-block-footer-meta {
display: flex;
justify-content: space-between;
align-items: center;
}

#styln-briefing-block .briefing-block-footer-ts {
color: #999;
font-size: 11px;
}

@media only screen and (min-width: 600px) {
#styln-briefing-block {
padding: 30px;
width: calc(100% – 40px);
max-width: 600px;
}

#styln-briefing-block a.briefing-block-link {
font-size: 1.0625rem;
line-height: 1.5rem;
}

#styln-briefing-block .briefing-block-bullet::before {
content: ‘•’;
margin-right: 10px;
color: #333;
font-size: 12px;
margin-left: -15px;
top: -2px;
position: relative;
}

#styln-briefing-block .briefing-block-header {
font-size: 17px;
}

#styln-briefing-block .briefing-block-update-time a {
font-size: 13px;
}
}

@media only screen and (min-width: 1024px) {
#styln-briefing-block {
width: 100%;
}

Ms. Jacobs, 60, started freelancing in 1989. Since 2015, she has freelanced full time. From 2006 until 2013, she was a staff writer at The United Methodist Reporter, a newspaper that shut down. It was the only job that offered her health and retirement benefits since she started writing professionally.

Other Texas organizations she writes for, including a theology school and a seminary, don’t extend benefits to freelancers. And that’s OK with Ms. Jacobs. Her husband, Steve Lavine, owned a market research company and retired comfortably five years ago. When they married in 2009, they combined living expenses, allowing her to increase her retirement savings and buy private health insurance. Mr. Lavine is on Medicare.

Her life would look much different if she weren’t married to someone financially stable, she said.

“I wouldn’t be able to meet my living expenses,” she said. “Sometimes I look at the situation and I think, OK, I have to write five short blog posts just to pay my health insurance. I’d have to find a different kind of work if I were single. I do feel lucky.”

She also knows that other workers her age have reason to feel not so fortunate. Ms. Jacobs chose her nontraditional jobs for their flexibility. Freelancing allowed her to work from home when her children, now 27 and 30, were growing up.

Are you helping someone financially because of the pandemic?

If you are helping a family member or friend who has lost income, or are receiving that help, during the coronavirus outbreak, The Times would like to talk to you.

Other workers, like James P. Shelley, felt forced to take nontraditional work in their later years.

“I had some nice jobs with some great benefits,” said Mr. Shelley, 58, a professional résumé writer in Yucca Valley, Calif. “Then in 2006 I hung my own shingle.” Not that he wanted to: “I was 44 years old, and nobody was hiring 44-year-olds.”

Since his 20s, Mr. Shelley had worked as an executive at Southern California health information management companies. He was fired from one firm in his 30s for not meeting sales quotas. A second company let him go in 2005 because it could no longer afford his salary. For decades, he provided his wife and children, now 31 and 29, with health insurance through his employers and made small contributions to company retirement savings plans. Since starting his own business, he has gone without health insurance. His savings have dwindled to zero.

He knows he is flirting with financial disaster. “It worries me terribly,” Mr. Shelley said. Especially the no-savings part. “My Social Security benefits are going to be minimal, and I’m not going to be able to survive on them.”

Health insurance for him and his wife, 52, whose job as a full-time office manager for an orthopedic surgeon also does not offer health or retirement benefits, has been too costly, he said — which makes them especially vulnerable now. Before the pandemic, he said, he didn’t worry too much because his health had been good. Now it’s a much greater concern.

Ms. Jacobs and Mr. Shelley have made careers of their nontraditional jobs, meaning both have spent the bulk of their later earning years forgoing benefits. According to the Boston center’s study, that lands them among the group of future retirees likely to see the highest rate of lost income: Their peers are apt to be 26 percent richer because they won’t have pulled from their own pockets to pay for health coverage or have interrupted the accrual of money in their 401(k)’s or pensions.

Making a career of these jobs also puts them among the majority of workers in those positions, who stay put rather than using them as stopgaps between jobs with benefits or bridges to retirement. Workers who bounced among mostly traditional jobs, with stints at nontraditional jobs in between, had about 6 percent less retirement income, the study found.

“Some people do use these jobs to tide them over between one traditional job and another,” Dr. Munnell said; those workers make up only about 25 percent. Fifty-four percent of the 4,174 respondents in the center’s study stay in their no-benefits jobs for years. Among them are people whose lack of a high school diploma prevents them from securing traditional jobs. Others are in Ms. Jacobs’s position, with a spouse to fall back on.

“For those two groups, there’s some logic in working nontraditional jobs,” Dr. Munnell said. “But a third group — they’re as well educated as the average worker, but they’re solo earners. We don’t understand why they’re there.”

Regardless, they will likely feel the pinch later. “It’s important in the later years of your life to be participating in a retirement program, because typically those are the years when accrual is most significant,” said Dan Doonan, executive director of the National Institute on Retirement Security. “It’s really your last chance to build up a nest egg.”

A January report from the institute found that 40 percent of Americans over 60 draw income from Social Security alone, while only 7 percent pay their bills through a combination of Social Security, a defined-benefit pension and a contribution plan such as a 401(k).

That may be because only about half of U.S. workplaces offer their employees retirement plans, Mr. Doonan said. “Access has been a challenge,” he said.

Yet that access may make the biggest difference when it comes to closing the gap between traditional and nontraditional workers’ retirement income.

“There’s usually a way to pick up health insurance one way or another, through a spouse or the A.C.A.,” Dr. Munnell said, referring to the Affordable Care Act. “But it’s very hard to save on your own. It’s not enough to say, ‘Anybody can go open up an I.R.A.,’ because people don’t do that.”

(Ms. Jacobs is an exception. “I’ve always been a worrier,” she said. “I’ve never been able to sleep if I didn’t have six months of savings in the bank, and I’ve always saved for retirement.”)

The lowest-paid workers may be the most reluctant to try to save for retirement. “There’s a lot of demands on a limited income,” Dr. Munnell said.

Workers like Mr. Shelley, whose business, like the hiring market, has ground down because of the coronavirus, know they are vulnerable. “I believe I have more than 20 years ahead of me, and that I’ll be doing this until the day I die,” he said.

He said he planned to move to a more affordable city when his wife retired and hopes his health holds out, at least until he qualifies for Medicare. “It’s only the catastrophic stuff, like a cancer diagnosis, that I worry about,” Mr. Shelley said.

Dr. Munnell wishes that he and other nontraditional workers were in a position to fret less.

“I was not only surprised, I was also saddened” by the research, she said. “The results mean that people have to worry about getting protections on their own, and that they have very unpredictable work lives.”