OPINION: ‘Pick. Click. Save.’ offers financial freedom to Alaskans

What famous American said, “A penny saved is a penny earned?” Was it a) Benjamin Franklin; b) Jay Hammond; or c) Albert Einstein?

The answer is, in essence, d) all of the above.

Benjamin Franklin enshrined Yankee thrift in the American character in his “Poor Richard’s Almanac.” Jay Hammond wanted to convert one-time earnings from North Slope oil wells into endlessly producing “money wells” in the Permanent Fund. And Albert Einstein called compound interest “the eighth wonder of the world.”

In the spirit of Franklin, Hammond and Einstein, I’ve introduced House Bill 245 to let Alaskans easily direct all or part of their annual Permanent Fund dividend into investment accounts that earn compound interest over decades to provide personal financial security. It’s called “Pick. Click. Save.”

Much like the popular Pick. Click. Give. program that lets Alaskans simply check a box on their dividend application to direct money to the charity of their choice, Pick. Click. Save. will let Alaskans direct their dividends to their investment accounts, like Individual Retirement Accounts (IRAs) or 401(k) accounts.

The hope is that streamlining the process for Alaskans to put money aside today to grow for tomorrow will help them build their personal financial security over the long term, despite increasingly uncertain financial times, instead of depending on potentially unreliable government benefits that may not be enough to support a comfortable retirement.

Here are some examples of how this would work for Alaskans at different stages of life. These assume a target retirement age of 65, deposits into a Roth IRA account, PFDs of at least the same size as last year’s $1,300, investment of the entire dividend, a 6% rate of return, annual compounding, and a marginal tax rate of 25%.

• A 40-year-old who started Pick. Click. Save. deposits next year would invest a total of $32,500 and would see his money grow to over $70,000 by retirement.

• A 21-year-old who started investing his full dividend through Pick. Click. Save. would deposit a total of $57,200 and see his money grow to more than $250,000.

• A baby born in 2025 whose parents invested all of her dividends in Pick. Click. Save. for her first 21 years would see her money grow to more than $600,000 by age 65. And if she continued such investing the rest of her adult life, she’d see her money grow to almost $1 million.

It’s important to note that HB 245 does not affect how dividends are calculated, the role of the Permanent Fund in state finances, where the Fund is invested, or other issues. It simply makes it easier for Alaskans to invest the dividend they receive in a way that benefits their long-term financial health.

Some might say nothing is stopping Alaskans from investing their PFDs in their IRAs already. In answer, it’s clear that nothing is stopping Alaskans from donating their PFD money to charity, either. Nonetheless, since its start in 2009, Pick. Click. Give. has resulted in Alaskans giving over $35 million to charities. I’m hopeful Pick. Click. Save. can deliver the same kind of beneficial results for Alaskans’ personal finances.

Pick. Click. Save. is a modest but important way to help Alaskans along their journey to financial freedom. With the support of Alaskans, expressed to and through their elected representatives, it can be up and running and available for us to use in time for the 2025 dividend.

Here’s one final question: On your 65th birthday, would you rather say: a) “Dang! If only I’d invested my dividend every year, I could’ve been a millionaire!” — or “I’m so glad I invested my dividend each year, because now I am a millionaire!” Passage of House Bill 245 to create Pick. Click. Save. will help make the second option a much easier answer.

Rep. Dan Saddler is a Republican in his fifth term representing Chugiak-Eagle River in the Alaska Legislature. He serves as House Majority Leader.

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