Retirement Preparations in the New Age of Self-Employment

The term “self-employed” covers a broad range of the working population, including sole-proprietors, people running small businesses, and those working for themselves and employing others. While many of the self-employed may have worked for employers in the past, for a variety of reasons they now work independently.

Despite the prevalence of the self-employed globally, in many countries, there is not yet a standard blueprint or template for them to prepare for retirement and build their future retirement income.

Unlike workers in traditional working arrangements, the self-employed are presented with unique challenges when thinking about retirement planning. Many have irregular incomes which makes it difficult to save on a regular basis. For the self-employed, saving for retirement often requires a do-it-yourself approach.

Because they do not participate in traditional workplace savings plans, the self-employed may also miss out on employer-sponsored retirement benefits, retirement plan contributions, and nudges to save for retirement (e.g., automatic enrollment). They likely also miss out on a wide range of other employee benefits that can help mitigate financial emergencies and protect savings, such as life and disability insurance, private health insurance, paid sick leave or paid vacation leave offered through the formal workplace. In some countries, the self-employed may not be entitled to full access to government retirement benefits.

Retirement Preparations in the New Age of Self-Employment, a research report based on a global retirement survey, is to provide insights into the retirement prospects of the self-employed and illustrate how their retirement prospects differ compared to employed workers. In doing so, this report provides a portrait of the self-employed, shares their vision of retirement, and outlines their approach to (or lack of) retirement saving, planning, and investing. It also reveals the vulnerabilities among the self-employed and offers recommendations for helping improve their long-term financial security. And it provides country-by-country comparisons of survey findings, key indicators, and examples of how self-employment is being supported through labor and employment practices and legislation.

This report is a collaboration between Transamerica Center for Retirement Studies and Aegon. It presents findings from Aegon’s 5th Annual Retirement Readiness Survey and spotlights how the self-employed view and are preparing for retirement. The 2016 survey comprises 17,600 respondents, of whom 1,600 self-identify as being self-employed in 15 countries including Australia, Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Turkey, the United Kingdom and the U.S. These countries were selected on the basis of their distinctive pension systems, as well as their varying demographic and aging trends.