Few people would say that saving for retirement is easy. But the process is especially difficult for people who work part time or who freelance for a simple reason: They are much less likely to have access to a retirement account through their jobs.
Uber is trying to change that for its drivers by partnering with the robo-adviser Betterment to give drivers access to individual retirement accounts.
Starting Wednesday, tens of thousands of drivers in Seattle, Boston, Chicago and New Jersey should be able to sign up for an IRA or a Roth IRA using their Uber apps. The retirement accounts, which will be free for the first year, is planned to eventually be made available to all Uber drivers through the app’s rewards program, the company says.
Uber reached out to Betterment about the partnership earlier this year after hearing from drivers who wanted more help managing their money, said spokesman Michael Amodeo. “Drivers said they wanted it to be easier to save for the long term, to take control of their finances,” he said.
Betterment is an online investing firm that offers low-cost brokerage accounts and retirement accounts. Drivers will be able to fund the accounts from their checking accounts and receive guidance from Betterment on how to invest, based on their risk tolerance and when they plan to retire.
For Betterment, the deal presents a chance to gain thousands of customers, says Joe Ziemer, a spokesman for the financial firm. After launching its investment business in 2010, Betterment serves 80,000 retirement accounts. While there is no telling how many people will sign up, the move will eventually make it easier for hundreds of thousands of Uber drivers across the country to open IRAs, both companies say. Betterment now has more than $5 billion in assets under management.
The retirement accounts won’t require a minimum investment, and Betterment is waiving fees for Uber drivers for the first year. After that, drivers will pay a maximum fee of 0.25 percent of assets. Normally, Betterment customers pay an annual fee of 0.35 percent of assets on accounts smaller than $10,000. The fee drops for larger account balances.
Uber drivers are being pointed to IRAs, which consumers typically have to open on their own and are different from typical workplace retirement plans. For example, some people in 401(k) plans sponsored by their employers might benefit from matching retirement contributions or may be automatically enrolled into the plans — features that can encourage workers to start saving for retirement and stick with it.
Uber drivers won’t have those perks. Still, some drivers may appreciate the flexibility of being able to open retirement accounts through their apps, Amodeo said.
Uber’s move to increase drivers’ access to retirement accounts comes as the company faces more pressure from drivers who want to be treated as employees instead of contractors. Last week, a federal judge rejected a proposed $100 million settlement in a class-action lawsuit from about 385,000 current and former drivers in California and Massachusetts. The judge called the settlement “unfair” and said it was not enough to cover what the drivers estimate they are owed.
By: Jonnelle Marte (The Washington Post).
Photo: Fast Company Design.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
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Uber’s move to increase drivers’ access to retirement accounts comes as the company faces more pressure from drivers who want to be treated as employees instead of contractors. Last week, a federal judge rejected a proposed $100 million settlement in a class-action lawsuit from about 385,000 current and former drivers in California and Massachusetts. The judge called the settlement “unfair” and said it was not enough to cover what the drivers estimate they are owed.
By: Jonnelle Marte (The Washington Post).
Photo: Fast Company Design.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
For The #FacebookTeam