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Plan Would Help Workers Save for Retirement


By David Lewellen

Mike Gallenberger has a plan for funding retirement—his inventory of guitars.

The Merton resident has been in business for himself most of his working life. After closing his last music store several years ago, he and his wife, Kathy, both 58, moved to all online sales. At retirement, he won’t rely on his 401(k), which he estimates at less than $35,000, but on slowly selling off about 300 guitars and 100,000 parts.

The Gallenbergers are actually ahead of many workers. A national study found that the median retirement account balance for all working-age households is only $3,000.

Social Security keeps many people out of poverty, but it was never designed to be a sole source of income. Private pension plans are becoming rare, and nearly 45 percent of all working-age households have no retirement account at all.

As the boomer generation enters retirement, at least 20 states are considering state-facilitated retirement savings proposals. In Wisconsin, AARP is lobbying in support of a bill, known as the Wisconsin Private Secure Retirement Act, to set up a system for those without access to a retirement plan at work to save automatically out of their paycheck.

For the Gallenbergers, such a program might afford peace of mind if Mike died first. Speaking of their retirement, he said, “Rating our confidence on a scale of 1 to 10, I’m a 7 or 8 and she’s probably a 3 or 4.”

A system of automatic payroll deductions that pays out only in retirement is “a really good idea,” Gallenberger said. “People dip into their 401(k)s, and they shouldn’t.”

1 million lack access
The retirement-savings situation around the nation is “a train wreck that’s happening, already happened or will happen,” said state Sen. Dave Hansen (D-Green Bay), who cosponsored the legislation in the spring. Many workers have underfunded savings accounts. The average 401(k) balance in Wisconsin in 2012 was about $45,000—and that’s just among those who are saving.

Nearly 1 million working Wisconsinites—about 42 percent of the workforce—have no access to a retirement plan. A better system is “necessary for economic prosperity going forward,” Hansen said.

Under the plan, workers would contribute voluntarily through payroll deduction. The funds would be professionally managed and would mirror investments made by the state pension system but kept separate.

The measure would create a Wisconsin Private Retirement Security Board to design the plan and work out details such as who would be eligible and how benefits would be calculated.

Lisa Lamkins, federal issues advocacy director for AARP Wisconsin, pointed out that even workers with good intentions usually don’t set up their own retirement accounts. Employees are 15 times as likely to save through payroll deductions, according to the Employee Benefit Research Institute.

“When many people get to retirement, they aren’t going to be able to afford basic needs,” said Lamkins.
Hansen’s legislative proposal, she added, would be “investing now to help taxpayers down the line. At
a very low cost, taxpayers would see a great return on this minimal investment.”

Republican leaders in the Legislature, preoccupied with the state budget, have not made the bill a priority. Advocates hope to build support for the measure by getting a hearing on Hansen’s bill during the fall legislative session.

The need for such a savings plan is gaining national attention. This year, Illinois, Oregon and Washington became the first three states to enact state-facilitated savings systems.

“Other states in our region are addressing retirement insecurity—Illinois, Minnesota and Indiana—and we should, too,” Lamkins said.

To contact your legislators and urge consideration of the retirement savings plan, go to

David Lewellen is a writer living in Glendale, WI.


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