Wisconsin Considers New Retirement Savings Option for Workers

All Milwaukee-area nonprofit president Tom Gauthier wanted was a convenient way to help his 13 employees save for retirement, but he found that the few plans available for smaller companies were too expensive and legally complex to set up.

Workers at small businesses should be able to easily set aside part of their paychecks for retirement just like those at larger ones, said the 72-year-old, whose West Allis company, Adonai Employment, matches people who have disabilities with firms that need their skills.

“I know many people who are struggling in retirement because they didn’t have a retirement program where they worked,” he said. “A payroll savings plan can make a big difference.”

Experiences like Gauthier’s are helping AARP Wisconsin build the case for a state-facilitated retirement savings option designed for employees who don’t have access to plans through their jobs.

Such a program could aid nearly 930,000 private-sector workers in the state, according to a recent AARP survey. And 85 percent of Wisconsinites polled support the idea.

“People are 15 times more likely to save for retirement when they have automatic payroll deduction at work,” said Lisa Lamkins, AARP Wisconsin advocacy director.

Last fall, Democratic Gov. Tony Evers created a task force to explore savings program options. Members include AARP’s Lamkins, elected officials, consumer advocates and residents.

They are expected to issue a report by mid-2020 to help guide policymakers.

This is a chance to be proactive before it’s too late, said state Treasurer Sarah Godlewski (D), who is leading the task force.

“One in 7 registered voters in Wisconsin don’t have access to a retirement savings network,” she said. “We know they can’t live off Social Security alone.”

Cost-effective for states

At least 10 states have adopted some form of a “work and save” program for employees without retirement savings plans available through their jobs.

They typically involve automatic payroll deductions, are portable from one job to the next and are free for companies. In the first year of Oregon’s savings program, more than 95,000 workers enrolled, contributing roughly $23 million in assets.

In Wisconsin, Godlewski’s office is examining possible program designs and what incentives would spur businesses and individuals to participate.

Proponents say encouraging retirement savings helps families achieve financial stability and is cost-effective for taxpayers.

A typical working household in Wisconsin has only $3,000 in savings; meanwhile, the state’s population is rapidly aging, Godlewski said. If more older adults retire with inadequate savings, help will have to come from municipalities and the state, she said.

People who exhaust their resources often end up relying on Medicaid for residential care or subsidized home care services paid for by cities and counties.

Money spent to set up a state-acilitated retirement program would help head off a crisis, Godlewski said.

AARP members, small-business owners and others can keep up with AARP Wisconsin’s efforts on this issue at aarp.org/wi, and show support by emailing wistate@aarp.org.

Joanne Cleaver is a writer living in Manistee, Michigan.

More on Saving for Retirement

• IRS Increases 401(k) Contribution Limits for 2020
• What to Do If Your Pension Plan is Frozen