MADISON—In a rare show of bipartisanship, state lawmakers are in support of an effort that would create a retirement-style savings account for every child from birth in Wisconsin.
In January, Wisconsin Treasurer Sarah Godlewski announced a bill that would create the 401KIDS savings program to help every child in Wisconsin save money for retirement. The framework of the legislation stemmed from the Retirement Security Task Force that Godlewski chaired.
In an interview with the Beloit Daily News, Godlewski said on Monday that a number of people who testified last year during public hearings before the committee signaled they wanted to save for retirement, but were unable to do so based on various factors.
The bill would create an IRA-like investment account for every child born or adopted in Wisconsin. The state would oversee investment and management. The individual account holder would access the savings once they became an adult to roll the funds into an additional retirement plan, pay off medical expenses or school tuition costs.
Families with existing children would be able to buy into the program to create accounts for children, with the ability to contribute to the fund over time.
“This is a win-win. You don’t lose anything from joining,” Godlewski said. “The big piece to know is that bipartisan support is what is needed and the fact that is what this bill has is setting it up on a path for success to improve the lives of Wisconsinites.”
A study by University of Wisconsin-Madison that was funded by AARP found that 427,300 Wisconsin residents are at risk of experiencing poverty during retirement in 2030, and the Survey of Consumer Finances (SCF) reports that less than 50% of all households contribute to a retirement account. Additionally, one in five households with respondents ages 55 to 64 reported no retirement savings.
Godlewski said the automatic enrollment to the account would be the first of its kind nationwide, with the committee basing legislation off of other state programs and a similar plan in Rhode Island that creates savings accounts for children.
The bill was introduced by Rep. John Macco, R-Ledgeview, Rep. Evan Goyke, D-Milwaukee and Sen. Janis Ringhand, D-Evansville. Rep. Mark Spreitzer, D-Beloit, is a co-sponsor of the bill. Spreitzer said Monday he was “glad” to see the bill was scheduled for a public hearing on Tuesday in Madison.
“(I) hope it continues to move through the legislative process,” Spreitzer added.
Ringhand said the bill would be vital to the future success of Wisconsin’s social and economic well being.
“It’s very important that every child gets this opportunity,” Ringhand told the Beloit Daily News. “It’s important to look at ways to get out in front of problems and to start people on the right path. That would be a big advantage for these kids and their families. It would ensure that they have a more secure future.”
Rep. Amy Loudenbeck, R-Clinton, said she was supportive of the idea that would create accounts for children, but questioned the nature of the current draft of the legislation.
“I believe the bill is well intended, but based on the feedback from the departments, may be cumbersome and somewhat costly to implement,” Loudenbeck said. “It’s certainly worth further discussion in the next legislative session.”
Godlewski said Monday the timeline for the bill was still unclear, but highlighted the success of a hearing set for Tuesday for the bill. The bill would need to move out of committee with a vote on the floors of both the Assembly and Senate prior to heading to Gov. Tony Evers.
“We’re not entirely sure what the legislative schedule is going to be,” Godlewski said.
Loudenbeck said it was “highly unlikely” the bill would be passed this year due to it being introduced late in the legislative session.