The Importance of Being “Retirement Secure”

Retirement Security is a new buzzphrase that you will be hearing more about—or you should! There is growing concern at the state level that a huge percentage of residents of Wisconsin have not saved enough for retirement, and once they retire from earning an income they will have to depend on public assistance programs.

The statistics are alarming:

• 88% of registered voters in Wisconsin do not feel financially prepared to retire (AARP survey);
• Over 400,000 seniors in Wisconsin will be living in poverty by 2030 (University of WI study on senior poverty);
• One in five households with respondents who are 55-65 years old has a negative net worth of $20,660 and no retirement savings (AARP);
• 30% of senior households are 200% below the federal poverty line (AARP).

Retirement funding should come from 3 sources: workplace savings, personal savings, AND Social Security—but too many people end up relying on Social Security alone. Almost 50% of WI residents are employed by small businesses; often, these workers don’t have access to a workplace retirement plan, yet their lower earnings make it harder for them to have sufficient personal savings to make up for that gap.

• Almost a million Wisconsinites between the ages of 18 and 64 do not have access to a retirement plan at work (AARP Public Policy Institute);
• While workers at all earning levels lack access, 81% of those without access are Wisconsin workers earning $40,000 or less a year (AARP Public Policy Institute).

It is clear why the state government has concluded that a Retirement Security crisis is looming on the horizon! The Governor’s Task Force on Retirement Security, formed in 2019, summarized their findings and recommendations in their report issued in February 2021, including these 5 primary recommendations:

(A) improving participation in employer-sponsored retirement plans,
(B) increasing access to retirement savings,
(C) creating an emergency savings pocket that protects retirement principal,
(D) fostering retirement savings at birth, and
(E) building financial well-being through centralized information and resources.

Personal savings are obviously key to retirement security, so key recommendations and initiatives revolve around getting more people to save, and generate retirement savings at an earlier age.

You can read the Retirement Security Task Force Report here if you’re interested in learning more: https://statetreasurer.wi.gov/Documents/Retirement%20Security%20Task%20Force%20Final%20Recommendations%20Report.pdf.

Have any questions follow up with Irene Strohbeen, member of Governor’s Council on Financial Literacy and Capability.

Email: ibstrohbeen@new.rr.com