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Wisconsin retirement ‘crisis’ target of new recommendations

Associated Press

MADISON, Wis. (AP) — A bipartisan task force that examined a looming retirement-savings crisis in Wisconsin is recommending a series of steps to improve the outlook, including the establishment of first-of-their kind savings accounts for every child born in the state, accounts that could be tapped for big purchases and saved for retirement.

Bills to carry out recommendations could be introduced for the Legislature to consider in the coming months.
“People are hurting now so I hope we take it as soon as possible,” said state Treasures Sarah Godlewski, a Democrat who is considering a run for U.S. Senate in 2022.

The task force report cites a University of Wisconsin study that showed more than 400,000 senior citizens in Wisconsin will be living in poverty by 2030, resulting in the state spending an additional $3.5 billion on public-assistance programs. Additionally, more than 900,000 adults between the ages of 18 and 64 have no retirement savings plans through their work, according to AARP. Between 2015 and 2030, the number of people over the age of 65 in Wisconsin will increase by nearly 60%, hitting 529,400 people.

“We’re about to face a retirement crisis,” Godlewski said.

The good news, as Godlewski describes it, is “this could easily be prevented.”

The recommendations are largely about helping younger people who are working now, and those not even born yet, save enough to avoid having a shortfall by the time they retire decades from now.

Godlewski said she has heard not only from people who’ve said they are worried about their own retirement savings but also from younger people who aren’t saving enough now or have no retirement accounts through their work.

Republican state Rep. John Macco, who was a member of the commission, said it was “incredibly important” that people have retirement savings options, but work must also be done to make it easier for people to use them. And Democratic Rep. Evan Goyke, who also served on the panel, said the proposals will make Wisconsin an “innovator and a magnet for opportunity, while also directly addressing disparities and immediate economic challenges.”

The recommendations are:

— Set up investment accounts for every child born in Wisconsin, with some initial deposit from the state. The account could then be added to by others to help children begin saving for retirement. How much that initial investment would be, and how it would be paid for, will be left to the Legislature to decide.
The money could also be withdrawn to pay for college, job training and first-time home purchases, which would make Wisconsin the first state in the country with such a program, the task force said.

— Provide incentives, including tax breaks, for employers to enroll workers in retirement plans, forcing them to opt out if they don’t want to participate.

— Set up a state-facilitated, privately managed IRA program called WisconsinSaves, which would offer a simple benefit plan for employers not currently offering one. Employees would be automatically enrolled but could opt out.

— Develop an emergency-savings system to ensure that employees have a rainy-day fund they can tap in emergencies, rather than their own retirement savings. Those who enroll in the WisconsinSaves IRA program would also have non-retirement money set aside in a separate savings fund that could be tapped for emergencies.

— Set up a centralized e-commerce web system to help people identify retirement-saving options.

Godlewski said she was working with the governor’s office and lawmakers on details about bills to carry out the recommendations and a schedule for when they would be introduced. She said her potential Senate candidacy should not affect the success of any proposals from the group she chaired.

“At the end of the day, whether you’re a Republican or Democrat, you care about the financial stability of Wisconsinites,” she said.

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