About 8.5% of U.S. households are headed by a self-employed person. While self-employed households tend to earn higher income than salaried households, research shows they also tend to take the biggest hit during an economic downturn.1
The emergence of independent contractors and the gig economy helped make self-employment a more viable option for Americans after the 2008 recession. Now, steps are being taken to help self-employed workers weather another economic struggle. For the first time, Congress passed legislation providing unemployment benefits for self-employed workers, including up to 39 weeks of coverage and an extra $600 a week through the end of July.2
The COVID-19 pandemic and its effects have been a difficult experience for everyone. Let us know if you need help creating a household budget during this unprecedented time.
One of the biggest detriments of losing a job is the possibility of losing health insurance, or at least being unable to afford higher premiums charged by COBRA. Because this recent crisis is a health care issue, the nation may consider the idea of de-coupling health insurance from employers. This would enable more workers to start their own businesses, and generate significant overhead savings for companies.3 At the very least, loss of income would not mean loss of health care coverage for the millions of Americans who receive employer-sponsored insurance.
Many companies have resisted allowing employees to work from home because of questions about productivity, logistics and technology challenges. However, the COVID-19 requirements for social distancing may push businesses to fully embrace the concept of off-site workers long term. According to Global Workplace Analytics, an employer can save about $11,000 a year per worker who telecommutes 50% of the time.4
Unfortunately, the 2018 Tax Cuts and Jobs Act eliminated the unreimbursed employee expense deduction for those now working from home. Therefore, even if your employer requires that you work from home for the rest of the year, you are currently unable to claim this tax deduction. Only the self-employed who work from home will be able to write off qualified expenses from their business income.5
However, working from home may be able to generate savings on some of your household expenses, such as work clothes, dry cleaning, lunches out and commuting to work. According to a study by FlexJobs, remote workers can save as much as $4,000 a year by working at home.6
There are other benefits, as well. For example, the average employee’s commute to work takes 26 minutes each day, adding up to four and a half hours in the car each week. If Americans reduced their commute by just one day a week, that would result in a 16% reduction in the U.S. carbon footprint. Plus, imagine how that newfound time could be put to better use.7
A month or two ago, working from home may have appeared to be a dream job, but many now forced into this arrangement may recognize its challenges, such as working longer hours; more distractions; and having a tougher time focusing on productivity, technology challenges, and juggling work and family life. The key is to find productivity during breaks from work, doing things like laundry, getting meals started, and taking time to exercise, all without even having to shower to go back to work.
America, and the world, will get through this pandemic, but in the meantime, we might as well learn from the experience and take away as many lessons as we can going forward.
Fresno Financial Planner Takeaways
As your Fresno financial advisor, we thought this was a good takeaway: The emergence of independent contractors and the gig economy helped make self-employment a more viable option for Americans after the 2008 recession. Now, steps are being taken to help self-employed workers weather another economic struggle. Many companies have resisted allowing employees to work from home because of questions about productivity, logistics and technology challenges. However, the COVID-19 requirements for social distancing may push businesses to fully embrace the concept of off-site workers long term. There are other benefits, as well. For example, the average employee’s commute to work takes 26 minutes each day, adding up to four and a half hours in the car each week.
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with the following…stop spend down and long term care strategies that can help you accomplish those goals.
Soutas Financial & Insurance Solutions Inc., your Fresno portfolio advisor, are committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
Content prepared by Kara Stefan Communications.
1 Karen Kaul and Laurie Goodman. Urban Institute. Jan. 14, 2019. “The mortgage market is not meeting the needs of self-employed workers.” https://www.urban.org/urban-wire/mortgage-market-not-meeting-needs-self-employed-workers. Accessed March 31, 2020.
2 Brittany Hoke. WTAE Pittsburgh. March 30, 2020. “Self-employed workers eligible for unemployment for the first time.” https://www.wtae.com/article/self-employed-workers-eligible-for-unemployment-for-the-first-time/31984815. Accessed March 31, 2020.
3 Phil Galewitz. Kaiser Health News. June 7, 2019. “Why Some CEOs Figure ‘Medicare For All’ Is Good For Business.” https://khn.org/news/a-large-employer-frames-the-medicare-for-all-debate/. Accessed March 31, 2020.
4 Lindsey Jacobsen. CNBC. March 23, 2020. “As coronavirus forces millions to work remotely, the US economy may have reached a ‘tipping point’ in favor of working from home.” https://www.cnbc.com/2020/03/23/what-coronavirus-means-for-the-future-of-work-from-home.html. Accessed March 31, 2020.
5 Darla Mercado. CNBC. March 26, 2020. “Stuck working from home? It won’t save you much on your taxes.” https://www.cnbc.com/2020/03/26/stuck-working-from-home-it-wont-save-you-much-on-your-taxes.html. Accessed March 31 2020.
6 Aimee Picci. USA Today. March 23, 2020. “If you’re working from home, chances are you’ll save money.” https://www.usatoday.com/story/money/2020/03/22/working-home-likely-save-you-money/5024967002/. Accessed March 31, 2020.
7 Science Times. March 31, 2020. “How COVID-19 Could Change the Future of Work.” https://www.sciencetimes.com/articles/25152/20200331/how-covid-19-could-change-the-future-of-work.htm. Accessed March 31, 2020.
Our firm is not affiliated with the U.S. government or any governmental agency.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc are not affiliated companies. California Insurance License # OK48173
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. Investing involves risk, including possible loss of principal. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Diversification cannot ensure a profit or guarantee against losses in a declining market. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 659682 – 6/20