Wisconsin should make itself more appealing to seniors and retirees.
WISCONSIN GOV. TONY EVERS is worried about people being unprepared for retirement - and he should be. So should everyone else, because statistics indicate millions of Americans basically have no savings to tide themselves over in their old age.
Evers is creating a task force to study retirement issues in Wisconsin. The group is supposed to look at the state's retirement system, as well as private systems such as 401(k) and individual retirement accounts.
Good luck with all that. Wisconsin's public retirement system is better than most, including how it is funded. Illinois, by contrast, is deeply in the red, making promises to public employees it won't be able to keep. As for the private sector, defined-benefit pensions are few and far between. And people have not made up the difference by saving for themselves - often, simply because they can't afford to on modest wages.
SO THE LIKELY outcome of this study will be a finding that older citizens are badly prepared to sustain themselves in retirement, and state law and policies do very little to help.
So let's look at how some states stack up with tax treatment of retirees, which is a good place to begin the study.
• A number of states do not tax individual income at all: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Retirees and non-retirees like that.
• More states do not tax retirement pension income: Alaska, Florida, Illinois, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington and Wyoming. Neither Wisconsin nor Illinois tax Social Security benefits.
• Illinois does not charge state tax on distributions from retirement accounts like IRAs. In fact, Illinois ranks among the best 15 states to retire because of its tax policies for older citizens. That's why, for example, huge sprawling retirement home developments can be found in Illinois - Huntley is a good example - but not in Wisconsin.
HERE'S A PROPOSAL for a couple of bold ideas Wisconsin could consider to improve the economic well-being of seniors and retirees:
• Join Illinois in not taxing retirement income. That also could include a payoff, by making Wisconsin a contender for large retirement village developments. People won't stay here for the weather. Give them a better reason.
• Exempt retirees' homes from school taxes. Most of them have paid the education system's high taxes - look at your property tax bill; most of it goes for schools - for decades already, long after their own kids left the campuses. Here's a sad truth: The government tax-and-spend machine can chase older people out of their homes, because on fixed incomes they can't afford property tax payments. That's shameful. When have they paid enough?
The incentive today is for seniors and retirees to get out, fleeing to tax havens elsewhere. Any state study about retirement security that fails to start with that premise isn't worth the effort. Go bold or don't bother.
A FINAL WORD: The newspaper has reported extensively on a trend that poses a deep threat to Wisconsin's economic vitality, which is an increasingly serious worker shortage as the big Baby Boomer generation retires. This, it seems, also ought to be part of the state study. Incentivizing companies to keep older workers on the job and retirees to return to the workforce is doubly helpful - augmenting income for older citizens and easing companies' worker shortages. Facilitating it by encouraging flexibility in hours - or even working from home - seems like a no brainer. What can the state do to make that happen? Governor, tell your task force to find out.