One in five Indiana public employees experience low financial well-being as they near retirement
The data is in, and there’s good news and bad.
Most older Indiana public employees say they’re doing great financially and are approaching retirement with confidence. That’s great news, right?
That’s part of what we found through a recent study of public employees in Indiana. Relational Gravity surveyed more than 500 actively-working state and local government employees aged 50 in March and early April 2022.
Nearly half are confident they will have enough money to live comfortably throughout their retirement years, while another 20 percent are uncertain.
More than 75 percent experience relatively high financial well-being, meaning they seldom, if ever, experience food insecurity and typically can come up with cash for an emergency.
Those with higher financial well-being include men, married individuals, and whites.
So, that’s the good news. What’s the bad news?
We found nearly a third of those surveyed worry they will not have enough money in retirement. Additionally, one in five is struggling financially.
Those reporting low financial well-being in the study include women, single individuals, and Black people.
Their financial challenges include struggling to pay for groceries and having little ability to fund emergency expenses such as a car repair.
Tell me something I didn’t know
Is it news that singles, women, and minorities struggle financially?
The financial struggle of these groups is, unfortunately, not new. But awareness of the scale of the problem – in this case, 20 to 30 percent – is the sort of vital information an employer or plan sponsor must have if they care to make a difference.
Traditionally, government employment has been a source of stable jobs, decent pay, and a good quality of life. But the Indiana survey data shows financial well-being disparities, particularly among women, those who are single, and Black employees.
Those responding to the Relational Gravity survey participate in a government defined benefit plan that provides a formula-based pension as well as a retirement savings account.
As with many pension plans, benefits are based on a formula including age, years of service, and salary.
However, in this case, those benefits are not protected from inflation. Any annual cost of living adjustments (COLAs) are not automatic and can only be made if legislated by the Indiana General Assembly.
Those who enter retirement in difficult financial circumstances are likely to struggle even more as they age. In this time of high inflation, financial stress can quickly become worse without COLAs.
Financial wellness education programs
Financial stress is an employer issue long before retirement. It can bleed into public employees’ work lives, leading to high absenteeism, turnover, and workplace distraction.
While wages and life circumstances can be significant factors in financial well-being, helping employees deal with the impact of those circumstances can make a cost-effective difference.
A key here is to help public employees improve their financial well-being before entering retirement. The data from our study and others clearly supports taking a strong look at offering financial wellness education programs for at-risk public employees.
Why you need employee or participant research
So, that gets us back to the question, why do you need research that tells you women and minorities are struggling?
The answer: Assumptions are risky. If you want to make a difference to your employees or plan participants, you must know their unique needs. You should not assume the results of the Indiana study match your workforce or plan participants.
As a caring employer or prudent fiduciary, you have the opportunity to make a difference by first understanding the scale of the problem in your plan or workforce. Then use that understanding to tailor a cost-effective program to the unique needs of those you serve.
Contact us to learn how you can measure your employees’ or retirement plan participants’ financial well-being and retirement confidence.
To download a report on the Indiana public employees study, including methods and data, click here.
