Remote work may offer financial benefits

Long version

During the COVID-19 pandemic, many of us have been forced to work from home. But once we’ve moved past the virus, many workers may continue working from home. More than one-third of companies with employees who started working from home now think that remote work will stay more common post-pandemic, according to a Harvard Business School study. This shift to at-home work can affect people’s lives in many ways – and it may end up providing workers with some long-term financial advantages.

If you’re one of those who will continue working remotely, either full time or at least a few days a week, how might you benefit? Here are a few possibilities:

  • Reduced transportation costs
    Over time, you can spend a lot of money commuting to and from work. The average commuter spends $2,000 to $5,000 per year on transportation costs, including gas, car maintenance, public transportation and other expenses, depending on where they live, according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. If you are going to work primarily from home, you should be able to greatly reduce these costs.
  • Potentially lower car insurance premiums
    Your auto insurance premiums are partially based on how many miles you drive each year. So, if you were to significantly reduce these miles by working from home, you might qualify for lower rates.
  • Lower expenditures on lunches
    If you typically eat lunch in restaurants or get takeout while at work, you could easily be spending $50 or more per week – even more if you regularly get coffee drinks to go. By these figures, you could end up spending around $3,000 a year. Think how much you could reduce this bill by eating lunch at home during your remote workday.
  • Lower clothing costs
    Despite the rise in “casual dress” days, plenty of workers still need to maintain appropriate office attire. By working from home, you can “dress down,” reducing your clothing costs and dry-cleaning bills.

As you can see, it may be possible for you to save quite a bit of money by working from home. How can you use your savings to help meet your long-term financial goals, such as achieving a comfortable retirement?

For one thing, you could boost your investments. Let’s suppose that you can save $2,500 each year by working remotely. If you were to invest this amount in a tax-deferred account, such as an IRA or your 401(k) or similar employer-sponsored plan and earned a hypothetical 6% annual return for 20 years, you’d accumulate more than $97,000 – and if you kept going for an additional 10 years, you’d have nearly $210,000. You’d eventually pay taxes on the amount you withdrew from these accounts (and withdrawals prior to age 59½ may be subject to a 10% IRS penalty), but you’d still end up pretty far ahead of where you’d be otherwise.)

You also might use part of your savings generated by remote work to help build an emergency fund containing a few months’ worth of living expenses. Without this fund, you might be forced to dip into your retirement accounts to pay for something like a major home repair.

Becoming an at-home worker will no doubt require some adjustments on your part – but, in strictly financial terms, it could lead to some positive results.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Edward Jones, Member SIPC

Number of words: 548

Short /radio version

PSA: Remote Work May Offer Financial Benefits

TBA: Jan. 25, 2021

Words: 187 (excluding FA’s name, address/phone number)

Have you been working from home during the COVID-19 pandemic? If so, you might be getting used to it, and even when it’s over, you may have the option of remote work. This can affect your life in many ways – and it could bring some financial advantages, too.

Just consider transportation costs: The average commuter spends $2,000 to $5,000 per year going to and from work, according to government data. If you’re working from home, you could save a lot by keeping your car in the driveway.

And if you drastically reduce your driving, you might qualify for lower insurance rates, too.

Plus, you could save even more by not eating out when you’re working from an office.

What to do with these savings? You could invest some of it in your IRA and your 401(k) or other employer-sponsored retirement plan. And you might also be able to build an emergency fund to help pay for things like a major car repair.

Becoming an at-home worker will no doubt require some adjustments on your part – but, in strictly financial terms, it could lead to some positive results.

This is (FA’s NAME), your Edward Jones financial advisor at (Branch address or phone #).

Member SIPC

Number of words: 187