Challenges Threaten the Financial Health of Low- to Moderate-Income 50+ and Require Innovative Solutions

By Andrew Dunn, Senior Associate, CFSI

For years, financial planners described the financial lives of individuals over 50 as following a predictable life cycle. The “traditional” path typically included diligently saving in an employer-provided retirement account, paying off a mortgage, then fully retiring while reducing expenses in order to live comfortably. However, this “traditional” path no longer holds true. CFSI’s new report, “Redesigning the Financial Roadmap for LMI 50+ Segment: New Challenges and Opportunities,” developed together with AARPF Foundation, shows that the financial lives of individuals over 50, particularly those with low- to- moderate incomes (the LMI 50+), are complex and dynamic.

The report offers an in-depth look at the increasing financial insecurity of the LMI 50+, a group that represents 50 million individuals in the United States. Using survey data from the US Financial Pulse 2018 Benchmarking Study as well as qualitative data from focus groups and interviews, CFSI found that the LMI 50+ segment struggles significantly with its financial health in some unexpected ways.

The Financial Health Reality

CFSI also identified five key financial health challenges that underscore how the second act of life has changed for LMI 50+ individuals:

  • The Savings Shortfall: 51% are struggling with insufficient short-term, emergency savings.
  • The Debt Burden: 39% have unmanageable debt.
  • The Physical-Financial Faultline: Many of the LMI 50+ aren’t adequately protected from medical shocks, resulting in negative consequences for their financial health.
  • The Retirement Reality: Many are unable to completely retire, and even those who do stop working still struggle with their financial health.
  • The Catch-22 of Family: Family obligations interact with the household finances in positive and negative ways.

There is a significant opportunity for innovators who may consider designing new products and services for this segment. Our qualitative research highlighted initial insights for these innovators. The LMI 50+:

  • Are open to using digital technology to manage aspects of their financial lives.
  • Appreciate being able to monitor transactions and pay bills online.
  • Care about security, but not in a way that limits the use of technology.
  • Desire relevant, actionable financial education and coaching for everyday financial management.
  • Use technology-centric innovations, but have differing levels of comfort with high-tech vs. high-touch engagement in their use of digital banking.

The LMI 50+ face dynamic and complicated financial health challenges that challenge our understanding of what kinds of products, tools, and engagement models they really need. These 50 million individuals represent both an urgent need and a substantial opportunity for financial services providers to offer better products, programs and tools. While innovators have been forward-thinking in developing technology solutions for other demographic groups such as millennials, the LMI 50+ represent just as much of a target audience that will benefit from innovation.

Read the full “Redesigning the Financial Roadmap for LMI 50+ Segment: New Challenges and Opportunities,report.

Industry leaders will discuss innovation opportunities relevant to this segment at CFSI’s EMERGE conference in May during the “Innovation Across the Ages: Designing for the Financial Health of the 50+” session.

This research represents CFSI’s first use of U.S. Financial Health Pulse data to focus on a specific population segment. If your organization is interested in learning from the U.S. Financial Health Pulse data in a comparable way, please contact me at adunn@cfsinnovation.org.


Andrew Dunn is a Senior Associate on CFSI’s Program Team. He is the lead author of the recent Redesigning the 50+ Roadmap report, and co-author of the U.S. Financial Health Pulse: 2018 Baseline Survey. He applies a data-centric lens to consulting engagements and CFSI’s own research.