The Looming Retirement Crisis

The Looming Retirement Crisis

By Joyce Luedke

Currently half of all Americans 65 and older live on $18,000 a year or less.

  • 75% of those nearing retirement age have less than $30,000 saved for retirement.
  • In Wisconsin 101,000 people 65 and older claim the Homestead Tax Credit.
  • In Wisconsin more than 48,000 households with people 60 or older received food stamps in 2010.Feel free to use this image, just link to www.SeniorLiving.Org

The number of people 65 and older is projected to nearly double over the next 30 years.

  • The number of people 85 and older will skyrocket 142% to 287,000.
  • The number of people 65 and older is projected to nearly double over the next 30 years.
  • The number of people 85 and older will skyrocket 142% to 287,000.
  • Over 3,900 people will reach the age of 100 or older, up from 1,200 in 2010.
  • The number of people under 17 is expected to grow by only 2%, and the working age population – those between 18 and 64 – will increase by less than one-half of one percent.

Using national numbers as a guide, it is estimated that over 1.5 million workers here in Wisconsin have no access to a retirement plan.

  • Many of those who have some type of retirement benefit are underfunded and will face a life of working longer or having to live with significantly less than they have currently.

According to the National Institute on Retirement Security 84% are concerned (and 54% are very concerned) that current economic conditions have hurt their retirement and 72% believe they won’t be able to make up any financial losses before they retire.


Goals of the Plan

  • Provide a low-cost, defined benefit option to employers and their workers in the private sector who currently do not have access to their own plan or whose plan is insufficient to help with their retirement security.
  • Provide an open and transparent process that involves the public in creating a secure private sector retirement plan that provides low cost, high quality options and provides every participant with a guaranteed monthly retirement benefit.
  • Create a strong fund that would provide incentive and opportunity for workers and their employers to save for their retirement without having to become money managers or expert investors.
  • Design a separate, secure private plan that builds on the success of the Wisconsin Retirement System, considered to be the safest and best pension fund in the country.

Plan Basics

  • The WPSRA would be separate from the WRS but it could be invested and managed by the State Investment Board in the same way that SWIBRetirement3 manages and invests the state retirement system and pension funds for 1500 other Wisconsin employers including local governments and school districts all across the state.
  • Participants in a defined benefit plan like the WRS are able to rely on trusted professionals who invest their money for them at much lower risk and lower cost.
  • It would provide a low cost alternative for those who do not have access to an existing plan and do it in a way that is low cost to them and low risk to taxpayers.
  • The WPSRA would be open to businesses and their employees, the self-employed and farmers among others, although one of the issues we’re trying to figure out is if it is possible to include individuals.


The Bill

The bill would create the Wisconsin Private Secure Retirement Board, a quasi-public board separate and distinct from the board that oversees the Wisconsin Retirement System.  (This needs to be done to protect the public employees’ retirement fund).

  • The goal in establishing the board would be to have a membership that understands management of pension and retirement issues and plans, but who do not have a conflict of interest due to their employment, investments or associations.
    • The Board would be composed of nine members serving staggered five-year terms.  The board would select the Chair.
    • In order to accomplish this at least 5 of the board members will be required to have at least 10 years of experience in making investments, but no one can serve on the board if they have a financial interest in or their employer is a dealer or broker in securities, mortgage or real estate investments.
    • If a member acquires an interest in these types of businesses or accepts a job in one of them he or she will be forced to vacate their membership on the board.
  • The Board would be responsible for developing the specifics of the plan including who would be able to participate.  But the goal would be to provide people who currently don’t have a retirement plan or whose plan is insufficient to help them achieve retirement security with an annuity plan that they can count on to be there for them.
  • The Board would also determine the amount of the annuity that a participant could expect when they reach retirement age as well as making determinations with respect to benefits for surviving spouses or domestic partners.