What are Portfolio Careers and the Gig Economy?
Are you thinking about transitioning to a new career or considering retirement? Perhaps you're not ready to entirely stop working yet. If that sounds familiar to you, you're not alone. There may be opportunities out there. Have you heard the term "portfolio career" or "gig economy" and wondered whether it might suit you? Well, let's dive deeper.
In 2014, around 40% of adults over 55 were still working or looking for work. In contrast, according to the Bureau of Labor Statistics in 2023, the percentage of people between the ages of 50 and 64 who are working or looking for work is 60.2%. Finding full-time employment becomes more difficult as individuals get older, because of potential ageism or employers considering more experienced workers as "too costly," opting to hire younger workers at a lower salary. With this in mind, what better way to keep people working than with portfolio careers?
The traditional model of working 9-5 for one employer until retirement has become less widespread. An increasing number of individuals are opting out of traditional work, choosing instead to have "portfolio careers," careers in the “gig economy,” or merely to be "free agents." These three terms can be synonymous; they all refer to having multiple clients or income sources instead of just one full-time position.
Portfolio careers are ideal for individuals who want to supplement their income before retirement in order to maximize retirement savings. They are also well suited for retirees to provide a continuing income stream to supplement social security and pensions. Portfolio careers are also perfect for anyone who is not attracted to the 9-5 job world. Whatever the scenario, if you're contemplating a career change and want to explore portfolio careers, we will discuss the challenges and benefits, along with requirements needed to be successful.
What is a Portfolio Career? Portfolio careers refer to those in which an individual juggles multiple income sources simultaneously, working on a variety of projects or jobs (often referred to as “gigs”). Instead of working full-time for one employer or client, portfolio careerists may work part-time or freelance (aka "free agents") for multiple companies or clients.
Portfolio careers offer potential career flexibility as well as greater freedom and financial support. Being successful requires organization and time management skills, as well as self confidence, persistence and “sales” ability.
Benefits of Selecting a Portfolio Career Path
There are many advantages of portfolio careers. Opting for a portfolio career allows you to use all of the knowledge gained in previous roles while experiencing fulfillment and personal development through this new source of income. It is an opportunity to play to your strengths and do more of what you do best or what you love to do. Other benefits include:
Increased Flexibility and Autonomy
If you're searching for extra time to do things in your social life, consider joining the gig economy. Perhaps years of full-time work have consumed too many of your weekdays. Now may be the perfect opportunity to take advantage of these days wisely. Portfolio careers allow for greater control over your work schedule and projects, including choosing when and how much work you want to do. Over 67% of people in remote work cite flexibility as a key factor in their decision to choose a portfolio career.
Diversifying Your Income
Diversifying income sources across a variety of projects and clients, in the same way one might diversify an investment portfolio, may be a way to lower financial risk. By not putting all your eggs in one basket, you are less likely to find yourself suddenly with no income stream (i.e., the loss of 100% of income after a workforce reduction or layoff). However, depending on one’s ability to secure work (aka “gigs”), it could be less stable than a salaried position. Just like the full-time job market, gig work is also susceptible to market fluctuations.
It's extremely important to save for retirement. Many people reach retirement age without enough savings to enjoy their retirement years fully. Being able to do additional part-time work may prove fruitful in the long run for retirees. Gig work will either enable you to increase your earnings pre-retirement, or could be the perfect means of supplementing your income after you have retired from the full-time work force.
Greater Job Satisfaction
It can be easy to settle for careers that pay the bills, but having multiple portfolio career paths may allow us to explore and pursue our interests more fully. Some individuals can make flexible opportunities the heart of their day-to-day life, compared to full-time jobs that either consume our weekdays or may occupy our lives 24/7, leaving little time for other personal pursuits or passion projects.
More Opportunities for Growth
No matter your age or background, starting a portfolio career offers excellent potential to develop new skills, experiences, and knowledge that can only serve to advance your professional life. Thus, an online-based freelance role could offer the chance for personal (and career) growth while earning you some extra income. If a portfolio career is an interim step while looking for a full time position, it may also provide an opportunity to gain new expertise and grow your resume to better position you for the ideal job you are pursuing.
Increased Resilience
A career decision like this can provide an income safety net. Still, to succeed, you must be self-motivated, willing to accept criticism, and be prepared for last-minute changes or setbacks due to clients or projects not moving forward as planned. In essence, although others are paying you, you are a self-employed business owner (aka, free agent) and the business is you.
If you're willing to dedicate yourself to independent work within the gig economy, prepare to hustle hard, take rejection, negotiate, and make sacrifices, in order to reap all the benefits of working for yourself. As an example, you may need to offer your services at a reduced rate or accept some less exciting gigs initially, to build your reputation and work portfolio.
Portfolio Career Considerations
Be Prepared
Before beginning any portfolio career, you must be prepared. Assess your skills and interests to decide on the best portfolio career(s) for you. It is also critical to create a budget and manage finances as part of your portfolio career journey.
Assuming projects don't fall into place immediately, it’s a good idea to have an emergency fund or retirement pot ready in case things take more time than anticipated to progress (and they probably will).
Moreover, gig employees aged 50 and older should be aware of the reality of the amount of work they may get. A Statista Research Department 2021 survey indicates that 3% of freelancers between 50 and 64 were getting freelance work at the time of the survey, while an additional 4% had gotten some freelance work within the past 12 months.
Seek Advice from Financial Professionals
Workers in thegig economymay benefit from working with experts like financial planners and advisors to manage unpredictable income sources while planning for future goals. A financial advisor can help identify tax write-offs and benefits, assist in filing tax returns, and provide important strategic guidance for financial planning.
Obtain Insurance
When entering the gig economy, you must establish what types of insurance policies best meet your needs including business insurance and liability insurance. The most important thing to consider is health insurance, since you may no longer have employer-covered insurance. Health insurance can help cover not only your day to day wellness care, but also any unexpected medical costs that may arise and, unfortunately in the United States, health care costs can be excessive. There are far too many scenarios about people who have spent their entire life savings because of an unplanned medical event for themselves or a family member. There is no reason for anyone to land in this situation. Since the passing of the Affordable Care Act (in the United States), insurers are required to make health insurance affordable and available for all, without penalty for pre-existing conditions. The healthcare.gov website offers guidance and links to find plans in your area or to assist in finding subsidized plans for those in financial need.
Final Thoughts
Overall, portfolio careers or the gig economy offer excellent options for those in transition, considering retirement or already retired. Gigs offer flexibility while enabling one to pursue other interests.
However, success requires self-motivation, a hustle mentality, and the willingness to embrace change and adapt quickly when new opportunities present themselves. You also need to understand that it will take time to build a following, and you need to maintain a positive outlook and keep on going, even if it seems like the work will never come.
If you are exploring portfolio careers, make sure that you conduct adequate research, network with professionals in relevant industries, and remain open-minded to new possibilities.
By being determined, it will allow you to craft fulfilling careers explicitly suited to you that help pave your journey toward retirement.
For more detailed guidelines, see University of Oxford's Guide to "Portfolio Careers: How to optimise and manage them."