By Joe Jarvis
Ten years ago most of us couldn’t imagine getting in a stranger’s car for a ride.
Or imagine the shock of your friends and family if you told them you had met a stranger online, and they would be paying you to stay in the spare bedroom for a weekend.
In 2009 Uber launched, and Airbnb was only a year old. Now millions of people use these platforms to make a little extra money – or even as their main income.
The gig economy is something that has grown up over the last decade. Websites like Upwork and Freelancer allow more people than ever to work for themselves from the comfort of their own home.
But even if self-employment isn’t your main gig, it can be a great way to earn some extra money.
And one of the best things you can do with that money is to forget about it. Put it away in a retirement account, and let it grow for a few decades until you are ready to collect it.
Back in 2009, this didn’t seem as necessary.
At that time, the Social Security Administration predicted that Social Security would still be solvent all the way up to 2040. If you were 65 in 2009, you probably weren’t planning too far past your 96th birthday.
But then the birth rate took a plunge. Five million fewer babies were born in America than expected. And suddenly, there weren’t enough people to sustain the Social Security system.
It requires 2.8 people paying in for every one person collecting, according to the SSA. By 2020, there will be just 2.7 people per retiree collecting. And it’s not getting any better– the birth rate is still at the lowest it’s been in decades.
That means Social Security is terminal. The new date that the trust fund runs dry is 2034– 15 years away.
If you’re retiring today, you might get to collect your full benefits until your 80.
If you are 55 or younger, you need to have a back-up plan.
Usually, Plan B is just in case something goes wrong. But in this case, the Social Security Administration has already told us flat out in plain English: something went wrong. They will have to cut benefits, increase contributions, or both by 2034 if the system is going to continue.
And all of the millions of people relying on the false promise of a healthy retirement from the government will be in rough shape.
The good news is that one of the best retirement plans available today is tailor-fit for the gig economy.
A Solo-401k is a retirement plan available to anyone who is self-employed, an independent contractor, or earning any money in addition to their main job.
Contribution limits are higher than a typical 401k or IRA because you can contribute as the employer and the employee. That’s all pre-tax income– you’ll pay when you collect it, presumably when you’re retired and in a lower tax bracket.
Until then, all that money can be invested, earning you even more money for retirement.
And with a Solo-401k, you have more control over where the money in your account is invested.
You can purchase investment real estate, foreign stocks, or cryptocurrency. You could even buy precious metals and keep them in a home safe using.
And all you need to take advantage of this structure is a little bit of side income.
So if you have an extra bedroom that can be rented on Airbnb, that income qualifies for a Solo-401k. Once you build up some capital, you could even use the money from your Solo-401k to buy an investment property, rent that out, and those gains would also go back into the Solo-401k.
If you’re coming up on retirement, or even decades away, this is a great option to get started.
Try your hand at selling on Ebay, or creating for Etsy. Open an Amazon shop, start a blog, or explore the gigs on Fiver.
And by the way, it isn’t just internet businesses that work for a Solo-401k.
If you sell your art at festivals, mow lawns, do handy-man work, or repair refrigerators, that income qualifies to go into a Solo-401k as well.
And if by some miracle the government manages to rescue their Social Security Ponzi scheme, you won’t be any worse off having extra cash for retirement.
This article was sourced from The Daily Bell.