Here in Wisconsin the average monthly benefit is $1,281. Most retirees augment this with pension income and private savings. But others simply have not saved enough. In fact, about 75% of people nearing retirement have less than $30,000 in savings. And traditional pension plans are disappearing.
Today only 7% of private sector workers are covered by a traditional pension plan. Some employers offer a 401(k), which lacks a guaranteed lifetime flow of income but does provide for income in retirement. Of those employers who offer those plans, only 60% provide a match to encourage employees to save. Over half of all private sector workers have neither a traditional pension plan nor a 401(k).
Bottom line is – we need to provide more opportunities for people to save for retirement.
When AARP WI looked at the various options, we had some key elements in mind. First, it had to be voluntary for employees. Second, the savings program had to be workplace based, since most people save more easily if money comes directly out of their paycheck before they have a chance to spend it. Making it portable – so that the employee can move it from job to job – was also a necessity.
Third, it needed to be low cost or no cost to the taxpayer. And finally, it should build on the expertise we have here in Wisconsin of having the very well-run and well-funded Wisconsin Retirement System. That is why AARP is supporting the Wisconsin Secure Private Retirement Act.
This act was introduced at the end of the session so no action was taken. We anticipate that it will be reintroduced next session. We hope it will have bipartisan support since it is also very good for small businesses, the self-employer, farmers and those currently without pension coverage.
AARP WI is doing outreach and education on this issue. We urge you to ask all the candidates about their position on the bill and what suggestions they have to deal with the lack of financial preparation of so many of the baby boom generation. After all, for the next 15 years 10,000 Baby Boomers a day will turn 65. We need to help them get ready!