AARP Foundation proposes to develop a suite of financial services and products specifically aimed at the key needs of this demographic which will include: encouraging savings (through increasing access to savings accounts and incentives), debt reduction (through debt management services), and building credit (through access to appropriate loan and credit products). All of these services are underpinned by a robust financial capability curriculum. During the first phase of this project, these tools and services will be marketed to employers of direct care workers. By virtue of the position in the marketplace as well as through the organization's existing relationships with key employers in the healthcare arena, AARP Foundation is confident that the Foundation will be able to engage direct care providers in the project.
AARP's program design will be two-fold: (1) adapting its existing models of providing financial products (such as the AARP Foundation Prepaid Mastercard) and reaching for the low-wage working population through current workforce programs; and (2) outreach to key employers with whom the organization has relationships to assist them in offering these financial tools and services to their employees. This will help remove the stigma of social services and build a more productive and stable workforce while encouraging more low-income employees to utilize financial products and services. This approach is particularly relevant with the direct-care workforce, whose job performance and retention are vital to improving the quality of life for older adults. A successful pilot will provide a launch pad for a scalable financial service suite that can be deployed to other industries employing hourly or low-wage workers.
This project will contribute to AARP Foundation's Income Security Theory of Change, which posits that interventions that seek to help struggling older adults achieve financial capability must occur at both the individual and community level. With that, AARP will measure the outcomes and impact at both an individual level and at an employer/community level: at an individual level, AARP Foundation will track if there is an increase in the financial capability and access to products and services by low-income individuals (over an established baseline); and at a community/employer level, AARP Foundation will track if there is an increase in the number and appropriate of resources (provided by both AARP Foundation and others), products, and services offered in communities to help the older employees increase their financial stability and capability.
Year 1 will be a pilot project aimed at implementing customized financial services and tools focused on the direct care workforce and transportation counseling and local products at several key employers. As this is new terrain for employers of low wage or hourly workers, AARP Foundation anticipates a period of outreach and cultivation focused on employers with whom they have strong relationships. By the end of Year 1, AARP Foundation anticipates partnering with at least two large-scale direct care employers in multiple states. The Foundation anticipates reaching over 500 older, low-income workers with approximately 100 adopting and utilizing the new tools during year 1.
Given that the universe of low-wage, older workers in the country is approximately 5 million, AARP Foundation is confident that this will set the stage for significant expansion in Years 2 and 3, in terms of both the number of employers offering these services as well as the number of workers utilizing them.
To date, there have been limited financial products, services, and educational tools designed specifically to help low-income older adults. This is true particularly for those who are aged 50-64 and in the workforce. There is a strong need to improve this population's financial situation and pave the way to longer-term financial stability. As it relates to this demographic, research shows that: 30% are more than ,000 in debt; 42% have less than of non-retirement savings; and 35% of 'low-wage' workers are at least 40 years of age.
At the same time, many 50+ are also struggling to uphold their responsibilities as members of the 'sandwich generation,' as in those who are raising young children and helping aging parents and adult children and their families who may also be in distress. AARP Foundation has performed extensive research on this group and has identified a number of common issues they face, including: lack of awareness of relevant and existing financial services; lack of appropriate financial products, services, and capability; and a need for personal assistance and guidance to understand and use appropriate and relevant financial tools and services.
A recent evaluation revealed that key issues in the target population were lack of confidence in handling finances and lack of savings. The evaluation showed that Finances 50+ participants reported that: 21% increased the amount they were contributing to saving; 33% were no longer spending more than their income; 47% reduced the amount of debt that they were carrying; and 147% deliberately cut back on spending to reach a financial goal.
While AARP Foundation will seed this effort, the Foundation is looking for financial partners. In addition, the organization is looking for employer partners with a particular focus on small business and the direct care industry.
For implementation partners, financial resources and support for communications, branding and media may be available.