How part-time workers need to plan for retirement

As some Canadian companies look to rehire workers during the COVID-19 pandemic, many of the recouped positions so far have been part-time over full-time jobs.


In July, Canada’s economy posted its third-straight month of employment gains, with 418,500 jobs added as many provinces moved to reopen their economies after COVID-19 related shutdowns. But more than 80 per cent of those jobs were part-time positions, according to Statistics Canada.

“It is a real big concern because part-time work obviously comes with part-time wages,” Nora Loreto, director at the Canadian Freelance Union, said in an Aug. 10 television interview with BNN Bloomberg.

Loreto flagged the job uncertainty that many part-time employees experience and said many of those workers end up pinched for savings when they retire.

“It comes with more precarity. It is unlikely that you’ll have pension contributions made by your employer if you’re part-time, and it’s also very difficult sometimes to cobble together enough of a job to be able to live.”

Jamie Golombek, managing director of tax and estate planning at CIBC Wealth Advisory Service, says it’s important to get into a habit of putting away funds regularly, since part-time or freelance workers often don’t have a company pension fund to rely on.

“Freelance work will be lumpy, but get an average of what you expect to make monthly or quarterly and then come up with a reasonable amount, without sacrificing your lifestyle to start putting it away,” Golombek said in a phone interview.

“It’s important to make retirement savings a priority and make a budget for it.”

Golombek suggested using a registered retirement savings plan (RRSP) or tax-free savings account (TFSA) to save on regular basis, whether that’s through an automatic contribution or simply by making deposits whenever you can.

Mia Karmelic, senior financial consultant at IG Wealth Management, highlighted the importance of having an emergency fund to offset the possible job uncertainty that comes along with freelance or part-time work.

“For freelance individuals, having an emergency fund is important to fill in gaps between contracts,” Karmelic said in a phone interview.

“While on a freelance contract, pay yourself first: have an automatic contribution going into these accounts to reach your goal. But if you’re on commission, or there’s a bonus to your pay on top of those regular payments, then around 15-to-20 per cent of that bonus should be added.”

Karmelic said the best incentive to save as a part-time or freelance worker is to outline the life milestones you want to achieve down the road, and then create a plan to reach them financially.

“Find that emotional connection to a goal to really review your finances. What do you want to accomplish over the next few years? Are you looking to buy a place? Have a family? Put your kids through school or retire down the road?” Karmelic said.

“It comes down to spending habits with fixed and discretionary spending, and looking for where you can make cuts to reach those goals. Just make sure you’re prepared so when you do reach those milestones like retirement, you aren’t caught off guard.”

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