Most talk of financial literacy is aimed at how to reach younger generations, and that’s great! But financial literacy matters to more than just the kids and young adults who, with your help, will be well-positioned to kickstart their adulthood in a financially sound manner. As your members age, so too will their financial needs. With a financial literacy program that seeks to address members at all stages of life, they will be in good shape as they reach retirement and beyond.
Financial planners are not accessible to all
One thing I have discovered as I have moved from college student to young professional to somebody in the middle of his career is that there is always something new to learn when it comes to finances. You spend years figuring out how to manage debt, start saving for retirement and for major life purchases. Then, just when you think you have a solid grasp on things, you get hit with medical expenses or your family grows, and you realize there was so much more out there you never knew about.
For those who can afford one, a financial planner can help with much of what you might be missing or just not understand fully. Unfortunately, access to financial planners is not in the cards for everybody.
According to a 2022 Survey of Consumer Finances from the Federal Reserve, just 54.3% of American families had a defined-contribution retirement plan or individual retirement account (IRA). And while the wealthy save for retirement as you might imagine, according to that same study, those earning less are falling far behind: “For example, 91.1% of households with household income of $150,000 or more had savings in these retirement accounts compared to 13.2% of households with income of less than $30,000.”
If so many are struggling to start saving for retirement, it is not likely that they are secure enough financially to hire a financial planner. (Though there are free financial counseling services from respected organizations—it doesn’t hurt to look!) That means they need assistance from other sources, and that’s where their credit union can enter the picture.
Help get the ball rolling on retirement savings
While I am not suggesting credit unions take the place of a licensed financial advisor, credit unions can help members with some of the basics using the very products and services the credit unions provide. Attractive rates on certificates or savings club accounts can help members get in the habit of storing a bit away, earning interest on those savings, and having something for the future.
For those with the means to begin tucking away a little bit more, credit unions that offer IRAs can help interested families navigate the waters of Roth vs. Traditional IRAs, among the other options. Even families that think it’s too late to start now can still benefit from some guidance today.
From there, as a trusted resource, credit unions can direct members to other financial planning resources that are vetted and reliable—since your older members probably aren’t scrolling TikTok for advice. Organizations like the National Council on Aging (NCOA), the Consumer Financial Protection Bureau (CFPB), or AARP have plenty of resources available to seniors to help with financial planning.
Managing debt and budgeting on a fixed income
For those already in retirement, regardless of what their current retirement savings are, managing debt and creating a reasonable budget will help stretch those dollars further.
While we all hope we can enter retirement debt free, it’s not a realistic possibility for everybody. Helping aging members restructure or refinance that debt can go a long way to ensuring they can live comfortably relative to their income. And again, pointing them in the direction of financial planning tools to budget that money and spend it responsibly will help. There may also be financial assistance programs out there that they are not aware of.
Avoid fraud and scams aimed at senior citizens
I recently wrote about how artificial intelligence tools and large language models are being used by scammers to craft increasingly convincing phishing attempts. While no age group is safe from criminal organizations, elder financial abuse is a serious threat to older members. According to the FBI, scams targeting individuals 60 or older resulted in over $3.4 billion in losses in 2023. And complaints and associated losses are on the rise, too.
For this reason, financial literacy and fraud prevention awareness should go hand-in-hand to ensure that those hard-fought savings of your members are not lost in a moment’s mistake. Helping keep aging members aware of the latest fraud tactics and what to watch for is critical. But the credit union also has its own work to do in monitoring for abnormal activity, as sadly, much elder financial abuse comes at the hands of somebody they may know.
As credit unions move increasingly away from doing things the “old-fashioned” way that older members may be more familiar or comfortable with, we have an increased responsibility to ensure that if business must be done online, it’s easy to train and we educate members on the common vulnerabilities they can avoid.
Equal share, equal opportunity to help
Engaging with younger members can be fun and encouraging. Helping set them on the path to financial success is rewarding. We in the credit union industry just need to remember that every member has an equal share in the ownership of our cooperatives, and that means we have an opportunity to meet and serve them where they are. Helping the most disadvantaged among us is a chance for us to flex our cooperative muscles and make a difference in the lives of all, young and old alike.
