MyMoney Online, Evergreen Content

‘Love of freedom’ making even well-paid Millennials worse off than their parents

(Sponsored by Old Mutual.)

Millennials’ love of flexibility is accelerating a worldwide shift from secure “nine to five” jobs towards freelancing and short-term contracts.

The 2017 Old Mutual Savings & Investment Monitor also found a growing trend in Slashers - South African millennials employed full time who are also taking on sideline jobs or starting a business.

A study by software company Intuit predicts that, by 2020, 40% of American workers will be independent contractors.

The 2017 Deloitte Millennial Survey shows that 43% of South African millennials are ready to embrace the gig economy, as this trend is now called.

“While this way of working may unlock new opportunities for young South Africans, and help to address unemployment, it’s important to also think of potential financial implications or risks and to plan around these,” says Ntombi Tisani, Head of Marketing at Old Mutual Personal Finance.

Foremost among these risks is the fact that freelancers are not obliged to contribute to any retirement fund the way permanent employees do.

In the formal employment sector, retirement savings are often a condition of employment.

The 2017 Old Mutual Savings & Investment Monitor (OMSIM) found that 45% of Gen Y (born between 1980 and 1995) have neither a pension fund nor retirement annuity in place.

“With nothing compelling them to make monthly payments towards their long-term financial wellbeing, there is a risk that the millennial generation will one day find themselves unable to afford to retire. Given that currently only 6% of South Africans are able to retire comfortably, this is a real concern.”

Furthermore, the implications for the state may also be severe if more people are expected to rely on social grants and the national healthcare system in their old age.

A lack of savings from millennial employees will also negatively impact on long-term national growth as a robust savings culture remains essential to sustained economic growth.

Tisani adds that even millennials who do hold down regular corporate jobs, but fail to preserve their retirement savings when they change jobs, could face a precarious future.

“Exacerbating the risk of inadequate retirement funding is the fact that our lifespans are getting longer, which means you will need more money to finance a lengthier retirement. Alternatively, you may need to continue working for longer before retiring.”

Another financial risk for freelancing millennials is the fact that their income tends to be erratic.

“When your income fluctuates and you don’t receive a fixed amount on a fixed date every month, not only is it hard to budget properly, but it’s highly likely that you will encounter frequent cash flow problems,” says Tisani.

“This makes it essential to build up, as soon as possible, some sort of emergency or buffer fund.”

What’s clear, she says, is that taking control of your financial destiny is particularly important for millennials.

“There’s no doubt that the gig economy offers exciting opportunities and greater freedom and lifestyle choice, but with this freedom comes risk that young people should take into account,” she says.

She recommends that those in the gig economy should not discount the value of financial advice and how a financial adviser can help them build a foundation for their future.

“No matter what space you play in – whether permanent employment or freelancing – a financial adviser can help you make informed decisions when it comes to your money.”

--

Enjoy The Money Show, but miss it sometimes?

Get the best bits emailed to you daily, right after it ends:

Subscribe to our mailing list

* indicates required

Get the 10 most-read articles of the week from Bruce Whitfield’s The Money Show, emailed to you every Friday morning:

Subscribe to our Business Wrap Newsletter


This article first appeared on 702 : ‘Love of freedom’ making even well-paid Millennials worse off than their parents


Recommended

by NEWSROOM AI

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Pieter-Dirk Uys gets serious about money (‘Evita is my pension!’)

Pieter-Dirk Uys gets serious about money (‘Evita is my pension!’)

The Money Show’s Bruce Whitfield interviews Uys about his attitude toward money (hopes and fears, successes and failures, etc.).

 ‘Port Harcourt is the capital of oil and gas in Nigeria’

‘Port Harcourt is the capital of oil and gas in Nigeria’

Bruce Whitfield interviews Lee Kasumba, who is on a fact-finding mission in Port Harcourt in Nigeria’s oil-rich Rivers State.

Each year rich countries waste as much food as sub-Saharan Africa produces

Each year rich countries waste as much food as sub-Saharan Africa produces

We waste a third of all food produced. If we avoid 25% of that wastage, it could feed 870 million hungry mouths.

Old Mutual investor? Did you receive a 'Shareholder Pack' in the post?

Old Mutual investor? Did you receive a 'Shareholder Pack' in the post?

What to do if you haven’t yet received details on how to vote on aspects of Old Mutual’s four-way split.

Old Mutual investor? How to approve (or vote against) aspects of its 4-way split

Old Mutual investor? How to approve (or vote against) aspects of its 4-way split

Watch out for the Shareholder Pack and listen to The Money Show over the next few weeks to stay up to date.

Does your Tax Free Savings Account suck? You’re not stuck! How to transfer…

Does your Tax Free Savings Account suck? You’re not stuck! How to transfer…

How to – quickly and easily – transfer in or out of an existing Tax Free Savings Account, for whatever reason.

Popular articles
Two young boys go the extra mile to get a sick dog to a vet with just R7

Two young boys go the extra mile to get a sick dog to a vet with just R7

Peter and Jerry gave up their last R7 to get a sick community dog (Lady) to an Animal Welfare shelter for medical attention.

Pieter-Dirk Uys gets serious about money (‘Evita is my pension!’)

Pieter-Dirk Uys gets serious about money (‘Evita is my pension!’)

The Money Show’s Bruce Whitfield interviews Uys about his attitude toward money (hopes and fears, successes and failures, etc.).

'Almost alcoholics' - the blurred lines between social drinking and alcoholism

'Almost alcoholics' - the blurred lines between social drinking and alcoholism

Sobriety advocate Janet Gourand explains the differences between the social drinker and an almost alcoholic.

[LISTEN] White callers debate privilege and response to apartheid

[LISTEN] White callers debate privilege and response to apartheid

Two white callers, Matt and Stephanie, disagreed on how white people should respond to apartheid as Eusebius McKaiser facilitated.

[WATCH] Safari that could have gone horribly wrong as buffalo charges vehicle

[WATCH] Safari that could have gone horribly wrong as buffalo charges vehicle

Khabazela shares some tweets, Facebook posts and videos that have gone viral.