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Surge in Part-Time Employment: Why More Americans Are Opting for Fewer Hours

A record number of Americans are choosing to work part-time for various reasons, including stay-at-home mothers, teens, retirees seeking extra cash, and employees who experienced burnout during the COVID-19 pandemic. As of December, 22 million Americans were working part-time, representing 13.9% of all workers. The pandemic has led to a reconsideration of work-life balance, with many prioritizing time with family or personal well-being over full-time work.

Despite a cooling job market, part-time work remains popular, and employers have been accommodating due to past labor shortages. The trend towards part-time and flexible work arrangements, including remote setups, is seen as a potential long-term structural change in the job market.

Groups choosing part-time work include teenagers, who have benefited from labor shortages and rising wages; burned-out workers seeking new opportunities; stay-at-home mothers who returned to the workforce in part-time roles; retirees, especially those without college degrees who are taking low-wage jobs due to inflation; and people in industries like restaurants and hotels that have a high proportion of part-time workers.

The Affordable Care Act has also played a role in the rise of part-time work, as it made it easier for workers to find affordable health insurance without needing a full-time job. The recent restoration and enhancement of ACA benefits by the Biden administration have further supported this trend. Read More.

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Navigating Simultaneous Contributions to a 401(k) and IRA

If you have access to a 401(k) through your job, you can also consider contributing to an IRA. In 2024, you can set aside up to $23,000 in a 401(k) ($30,500 if you're 50 or older) and up to $7,000 in an IRA ($8,000 if you're 50 or older). However, high earners may face limitations on tax-deductible traditional IRA contributions if they or their spouse are covered by a workplace retirement plan.

For those who can't deduct their IRA contributions, nondeductible contributions are an option. These contributions are taxed upfront, but the earnings grow tax-deferred until withdrawal in retirement. Some individuals opt for a backdoor Roth IRA conversion with these funds to enjoy tax-free earnings growth.

If managing nondeductible contributions seems too complex, you might choose to focus solely on your workplace retirement plan or consider other savings vehicles like a health savings account (HSA) for additional retirement funds. Always check the latest contribution limits and income limits for deductible IRA contributions each year before making retirement savings decisions. Read More.