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CALL 6: Hoosier families struggle to save for retirement

One million in Ind. have no 401K through employer
Posted at 2:18 PM, May 03, 2017
and last updated 2017-05-03 20:52:54-04

All this week on RTV6 at 6 p.m., Call 6 Investigates Kara Kenney is looking at the true Cost of Living in Indiana and how you can get ahead.

INDIANAPOLIS -- Approximately one-third of Hoosiers have nothing saved for retirement, and one million workers in Indiana don’t have the ability to save for retirement through their employer, Call 6 Investigates found.

Darien Pennybaker, 50, is a food service worker in a Warren Township school cafeteria and at times, has taken on a second job in fast food.

“I love to cook,” Pennybaker said. “BBQ ribs are my favorite.”

Despite working hard throughout his life, Pennybaker has no nest egg saved whatsoever.

“It’s not a good feeling,” he said. “It humbles me a little bit.”

Pennybaker makes about $35,000 a year, and his wife works at a day care.

They have a huge family of children and grandchildren.

After paying bills, there’s not much left over every month.

"I have a car payment, I have to help with the rent, utilities, just basic household necessities," said Pennybaker.

Pennybaker does not want his kids and grandkids to struggle like he has.

"I would love to take them somewhere they've never been before because my mom worked up until the day she died, and we never got to go anywhere,” said Pennybaker. “She worked two jobs the same way."

Pennybaker’s employer does offer a 401K, but one million Hoosiers do not have access to a retirement savings plan through their employer, according to AARP Indiana.

Not saving for retirement has consequences, according to Jason Tomcsi, spokesperson for AARP Indiana.

“You may never get the chance to retire, you'll have to just continue working,” Tomcsi said. “It robs you of something you've worked your entire life to take that step back."

According to a study from the Indiana Institute for Working Families, a 55-year-old couple living in Tippecanoe County should expect to spend a little over $500,000 throughout retirement.

MORE | Check out the full study here

If they started saving at age 25, they would have to put away $157 a month.

If they wait until age 55 to start saving for retirement, that increases to $480 a month.

Bottom line is, the earlier you save the better.

“We have an average savings of about $26,000,” said Erin Macey, policy analyst with the Indiana Institute for Working Families. “By your 40s, you should have about two to three times your salary set aside.”

But things like credit card debt, student loans and saving for college can get in the way pretty fast, said Macey.

Experts recommend you should not plan to rely on social security.

The average monthly social security benefit in Indiana is $1,308, according to AARP Indiana.

“It was never intended to be the sole part of your income when you retire,” said Tomcsi.

Darien Pennybaker hopes to start putting money away through his company’s 401K.

“My hope is to get somewhere I can put a little money aside,” said Pennybaker. “I love to cook. I would love to have my own restaurant."

Shortly after recording our interview with Darien Pennybaker, he suffered a heart attack that landed him in the hospital.

It’s just another example of a setback Hoosiers are experiencing when they try to get ahead financially.

Are you saving enough? Click here to use AARP's retirement calculator


Step 1: Define Your Retirement

You probably have some idea of how you'd like to spend retirement. Here's where you write your objectives down, listing the most important goals first. For now, don't focus on budget. Focus on ideas, and be as specific as you can. For example, instead of "travel," list "trips to the lake" or "walking tours of foreign countries." Instead of "stay involved in my community," write down "volunteer with kids one day a week."

Try to limit the list to your top five goals. Keep a scrapbook or start a journal depicting how you envision your retirement. Be practical: Your list should rule out unnecessary expenses. Make sure all your financial needs are met as you brainstorm. The more descriptive you are, the more tangible your retirement will be. This will help keep you focused on a realistic set of goals, which will make each of them more attainable.

If your goals are still general or vague, that's OK, too. You can simply start by outlining how you envision enjoying your retirement.

Step 2: Take Stock of Your 'Assets'

You know how much you bring home each month, how much you have in the bank and how much you have in your retirement account. But what about those other nontraditional assets that could help fund your retirement? Maybe you collect antiques or restore cars. Perhaps you're an accomplished pianist or have a half-written novel you want to finish.  

Many hobbies and skills can be turned into real income in your retirement years — trading antiques or teaching piano lessons, for example. Take the time to list all of your hobbies and skills. Don't worry if your list is small, but do list all of your passions and untraditional "assets." After that, start thinking about how you can morph those skills and hobbies into money-making endeavors.

Step 3: Evaluate Your Health — Now

To get the most out of your retirement — and life in general — you want to be as healthy as possible. And while few of us enjoy doctors' visits, a little preventive medical attention can go a long way.

Schedule your checkups and preventive exams now, from an annual physical to teeth cleaning. At each appointment, work with your provider on a plan to improve or maintain your health. Commit (or recommit) to eating healthy, exercising and getting enough sleep. Healthy living doesn't have to be a chore. Many healthy foods are delicious and satisfying, and exercise can be fun (walk on the beach, anyone?). Commit to staying mentally sharp with brain games, puzzles and books. Staying in close contact with family and friends will help you maintain your health both physically and mentally and may aid in fighting off any blues that may arise once you are retired.

Step 4: Determine When to Collect Social Security

(Hint: Later Is Better!)

Wouldn't it be nice if you saved and invested enough to enjoy financial freedom during retirement? Perhaps you did but for many that's not reality. Most of us will need the Social Security benefit we'll receive — both to pay for basic essentials and to support our retirement dreams. The age at which you choose to start collecting Social Security will have a direct impact on how much you'll get in monthly benefits. The longer you wait to claim Social Security, the greater the benefit for you and your family.

Consider this: A widow or widower whose spouse claimed Social Security at full retirement age or older gets 100 percent of the benefits. A widow or widower whose spouse claimed benefits early gets 71 percent to 99 percent, depending on when the spouse began claiming. If you wait to claim, you'll also be eligible for delayed retirement credits, which give you an increase in benefits each year until you reach age 70. Whether you are married, single, widowed or divorced, it usually pays to wait to claim. AARP's Social Security Benefits Calculator will show you when it's best to claim.

Step 5: Network Through Social Media and Other Methods

You need to build and maintain your network even in retirement. Use networking opportunities to showcase your talents. It's OK to brag about yourself to those who might help you fulfill your retirement dreams.

Include a networking strategy in your retirement plan. It may involve spending an hour a day on Twitter or LinkedIn "conversing" with people who share your skills and interests, or starting a morning meetup group at a local coffee shop to discuss ideas with other soon-to-be retirees. Such strategies will build relationships that in turn can grow your network. Also, be prepared to have clear, direct answers to such questions as "How can you use your talents and experience to contribute part time to an organization or cause?" The more socially active you are — online and offline — the more opportunities you are likely to create for yourself.

Step 6: Decide How Much You Want (or Need) to Work

This is the classic cost-benefit equation: Unless you are financially set for life, you will have to either stretch limited money and give up some retirement dreams or stay in the workforce (in some capacity) to help pay for those dreams. As you write down your retirement goals, take into consideration how much work is necessary.

In the previous step, you were encouraged to look at your interests. But you should consider your lifestyle and preferences, too. "Work" will mean different things to different people in retirement. Either way, to ensure you successfully reach your goals, you'll have to decide how much time you want (or need) to spend at a job. Don't wait until after retirement to make the decision. Weigh right now the pros and cons of working — including how many hours per week. The sooner you get comfortable with this decision, the more secure you will be in your retirement planning.

Step 7: Create a Retirement Budget

Your budget needs to include:

Start by tracking your income and expenses for a couple of months. Next, figure out how much money you'll need in retirement to support your chosen lifestyle. You'll also need to do a financial checkup of your investments. Make sure you are diversifying your money into multiple investments, investing in things you understand and going with those investments that won't cost you a ton in fees. If you are carrying debt, make sure your budget includes monthly payments to knock it down. Once you have a budget you know you can stick to, start putting it into action. AARP's Retirement Calculator can help you take a deeper look at the numbers.

Step 8: Find New Ways to Cut Your Expenses (Start Saving More)

Your retirement may be right around the corner or years away. Regardless, saving more now will always make you better prepared. That doesn't mean all of your extra cash has to go into savings, but now is the time to find new way to cut your expenses. Start by listing your bills and then figure out ways to trim them. Maybe you don't need 100 cable channels or to eat out three nights a week. Even cutting one movie night a month can bring you closer to your retirement goals.

Got a green thumb? Growing your own vegetables can save you money that can be socked away for retirement. Don't ignore your debt as a way to save more. Cutting your debt now will mean less worry when you retire. One strategy that works for many people: Pay off your smallest debts first, regardless of interest rate. This gives you a sense of accomplishment and empowers you to go after the bigger debts, knowing you have the willpower to eliminate debt.

Step 9: Prepare for the Unexpected

Few of us head into retirement expecting the worst. But sometimes it happens. Prepare for the unexpected now and you won't get caught off guard later. Taking time to consider how you'd pay for — and respond to — everything from minor issues like a roof leak to serious ones like a grave illness will help you weather those storms when they come. Discuss the big issues with your family or those closest to you. How much would it cost tomake major repairs? What would you want to do (or what care would you want) if there was an illness in the family?

Step 10: Stick to Your Plan (Our Community Can Help)

This step may be challenging but it's definitely rewarding: sticking to your plan. We humans are creatures of habit and it's common to revert to old habits after trying a new course. We have ways of helping you avoid that. Joining our online community will connect you with others going through the same life changes.

The community holds a wealth of information, ideas and tips, and for many is a source of comfort and strength. So join now, build your profile, share photos and even publish a blog. Use the community to tell us how we can help you realize your dreams so you and your family can enjoy the retirement you so richly deserve.

Next, take stock of your protection. Do you have enough homeowner's insurance to cover a major calamity? Is your health insurance or long-term care insurance adequate? If your insurance coverage lacks some things, now is the time to increase it. Put money aside for the unexpected. Preparing now means you won't pay later.

All this week on RTV6 at 6 p.m., Call 6 Investigates Kara Kenney is looking at the true Cost of Living in Indiana and how you can get ahead.