“The reason they call it the American Dream is because you have to be asleep to believe it.” George Carlin, comedian
Being able to retire with dignity and financial independence was once an anticipated and expected reward for a lifetime of work. But for many people this dream is not going to come true. Many people will not have enough to retire comfortably. Some people will not be able to retire at all. This decline in secure, adequate income for older persons will affect us all. It will have a negative impact on states, like Wisconsin and Minnesota, which have significant retiree populations.
In Wisconsin Governor Tony Evers proposed a study group on retirement security in the state budget. His proposal was cut by the Republican controlled legislature. Now State Treasurer Sarah Godlewski is using the independent authority of her office to work with Governor Evers on this issue. Wisconsin Public Radio reports she will head up a retirement security task force to explore ways to educate people about retirement programs and create new investment options for people in the state. The task force will look at what other states are doing and make recommendations for increasing retirement savings in Wisconsin.
The retirement task force is similar to prior efforts to study the retirement crisis in Wisconsin. In the past Senator Dave Hansen (D., Green Bay) proposed studying the feasibility of creating a private sector retirement program modeled after the highly successful public employee retirement program (Wisconsin Retirement System or WRS). Republicans never allowed that proposal to be considered by the legislature.
Given the likely Republican opposition to any recommendations from the new task force, Treasurer Godlewski is limiting the scope of the task force’s work. The task force will probably look at existing individual savings programs (Individual Retirement Accounts or IRA’s) and employer sponsored retirement savings programs (401K’s). Creating a retirement pension program similar to WRS is probably not going to be considered. The task force is a good step in the right direction, but limiting consideration of all the options is counterproductive.
Retirement security is sometimes described as a three-legged stool. For most people this means having Social Security, personal savings, and an employer provided pension. Most of us are not independently wealthy or do not have an inherited trust fund. We need to have diverse sources of income in retirement. In the past many major employers, union employers, and government jobs provided a company sponsored pension.
Retired people who achieved financial security had savings, equity in a house, and were fortunate to have had a decent employer paid pension. In other words, successful people had more than one leg to stand on.
The good news is there are solutions. Retirement issues have been studied, documented, and discussed for decades. Much has been written about the retirement crisis (including in the Reader – see links below). There are successful models for what can work. There are proposals for expanding Social Security, creating guaranteed retirement accounts, and improving individual retirement savings options. Some states are moving forward to address these problems. They are creating innovative programs to help people save more and helping employers afford retirement benefits. Other states are looking at ways to mitigate the weaknesses of 401k programs.
We all need more than one leg to stand on.