AARP Indiana and the Institute for Working Families have teamed up on this spotlight on low-income working Hoosiers age 50+.

Picture an older Hoosier and you may call to mind a relaxed retiree swinging a nine iron on the golf course. However, this image does not represent the reality for the many Hoosiers age 50+ who work and/or experience financial insecurity in their later years. Even among adults who hit the traditional retirement age of 65, nearly a third continue to work or seek employment through their late 60's. As time goes on, these percentages are likely to increase. So too is the proportion of older Hoosiers living in poverty or below self-sufficiency; currently, eight percent of older Hoosiers live in poverty, and approximately one in four have an income below what is necessary to be self-sufficient. Why are these numbers expected to rise?  

In two words, retirement savings. Today, 64% of Americans are worried about having enough money for retirement, up from 60% in 2015. According to the Financial Security Scorecard, only about half of Hoosier workers participate in an employer-sponsored retirement plan and the average savings in defined contribution (DC) accounts in Indiana is $26,971. This is not far off from the national average, with 46% of private sector workers participating in a retirement plan and defined contribution account balances averaging $30,345. Experts recommend that by one’s 40’s, an individual should have saved 2-3 times her salary. Without these savings, many come to rely almost exclusively on social security. In Indiana, 26% of Hoosiers age 65+ depend on social security for 90% or more of their income, and the average benefit amount is only $1380 per month.

Some advocates and policymakers are taking action to help individuals prepare financially for the later years. California recently launched a new state retirement plan for small business employees who lack access to workplace plans. Last session in Indiana, AARP championed a bill that would have established the Hoosier employee retirement options (HERO) portal – a platform to connect Indiana employers with financial services firms for the purposes of establishing retirement plans for their employees. It is uncertain whether this bill will be reintroduced this session. Either way, getting retirement savings rolling is only half the battle.

Even among savers, income equity is an issue. Women are more vulnerable to retirement savings shortfalls - they typically live longer, have higher lifetime medical costs, and receive lower pay. They are also more likely to take time out of the workforce or change careers for caregiving purposes. The hidden costs of these gaps in employment can amount to as much as four times an individual’s salary per year out of the workforce. As a result, paid family leave and a more reliable, cost-effective childcare system would also improve Hoosiers’ ability to retire with dignity by facilitating primary caregivers’ abilities to persist in their careers.

Paid leave is not only just an important support to new parents. While many older adults are no longer giving birth, the need for family and medical leave is still great as these workers balance the needs of their employers with their own medical needs and those of aging parents, ill spouses, and grandchildren. The Council for Disability Awareness suggests that 1 in 4 workers will experience a medical event requiring significant time off work over the course of their career, but not all individuals are prepared for the accompanying loss of income such an event can bring. Furthermore, AARP Public Policy Institute estimates that in Indiana, 837,000 family caregivers provided 779 million hours of care to elderly or disabled family members. Many older Hoosiers also need time to care for grandchildren; in 2015, 124,000 Hoosier grandparents lived with their grandchildren, and nearly half were responsible for the children’s basic needs. These responsibilities and the lack of leave policies beyond the Family and Medical Leave Act mean that each year, an estimated 3.6 percent of Hoosier employees age 50+ need time off from work and are unable to take it.

For Hoosiers who have worked hard in their jobs and in their homes, the third act should be a time to enjoy the fruits of those labors. Without a shift in policies, too many Hoosiers will spend those golden years struggling to balance both their checkbooks and the competing demands of work and family. AARP Indiana and Indiana Institute for Working Families encourage the Indiana General Assembly to consider the needs of current and future Hoosiers, acting on legislation that will help Hoosiers achieve and maintain self-sufficiency across their lifespan.