The median retirement account balance of working-age Americans is $0. And elder poverty is on the rise in Wisconsin with longer retirements, rising healthcare costs and flat incomes with little savings.
In Wisconsin, 9.5% of older residents were living in poverty in 2017, up from 9% in 2016, according to the Institute for Research on Poverty at the University of Wisconsin–Madison, while poverty rates dropped in 2017 for all other demographic groups.
The above findings are contained in a new report from the Legislative Reference Bureau titled “Retirement Security in Wisconsin.” While retirement savings is a national problem, the report looks at how it can be addressed at the state level, and stated that legislative action will likely be required to do so. Some other states have begun retirement savings programs available to all state residents, in which employers and employees can participate. The report also explored how some of these plans work in 10 other states including Oregon, Illinois and Washington.
The report is divided into four parts, focused on:
- The rise in elder poverty and the aging of Wisconsin’s population
- The most common sources of retirement income: Social Security, defined benefit plans, defined contribution plans and personal savings.5
- Retirement savings laws and incentives at the federal and state levels
- A summary of legislative action in Wisconsin.
The report, authored by legislative analyst Jessie Gibbons and legislative attorney Mary Alice McGreevy, cited that “millions of retirees rely solely upon Social Security benefits to support themselves. Those modest benefits, averaging just $1,443 per month for the typical Social Security beneficiary in Wisconsin, do not cover the significant health care and housing expenses most face in retirement.” They also found that in Wisconsin, the average Social Security check would cover the cost of just ten days in an assisted living facility.
A major factor is healthcare costs, which the AARP has estimated use up 17% of elder income. This can include long-term care, dental care, hearing care or vision care, which the report noted are not covered by Medicare. Other out-of-pocket expenses include deductibles, co-insurances, copayments, as well as any premium for supplemental insurance. The report also cites the median cost of an assisted living facility is $51,600 per year, nursing home care $100,010 per year or $112,146 for a private room.
“Wisconsin has seen bills introduced in the past three sessions to create the Wisconsin Private Retirement Security Board, and in this session a proposal for REvest has been offered, but as-to-date no legislation has been passed or signed,” the authors wrote.
“Hard-working Wisconsinites deserve to have peace of mind in retirement so they can enjoy those years with their friends and family, yet too many Wisconsinites are unprepared,” Gov. Evers said in a statement announcing the group. “We need to make sure that the state is playing a proactive role in helping Wisconsinites get ahead in saving for their futures, so they can enjoy those years in financial security with their friends and family.”
In taking on the task, Godlewski said that the long-term financial health of Wisconsin is at risk if no action is taken in this area.
“Our first step as a task force is to hear from and understand the barriers Wisconsinites are facing across our state when it comes to saving for retirement,” said Godlewski. “We’re working to schedule events around the state to continue to hear the perspectives of people on all corners of this issue.”