In 2002 Kathleen Kennedy Townsend, scion of the famed Kennedy political dynasty, ran for Governor of the state of Maryland. She lost. “The citizens didn’t do the right thing,” she jokes.

What would she do next?

California Democrat Kathleen Brown, the youngest sister of former California Governor Jerry Brown, gave her some advice.

“Don’t do anything you know something about because you’ll just be disappointed,” Brown said. “Do something totally new and totally different. Get involved in finance because finance, like politics, is big and important and it makes a difference.”

“I said, great, and I started working with a financial firm,” Townsend recalls.

Townsend began her career in finance, but she couldn’t turn her back on her political and crusading roots for long after she discovered the shocking state of America’s retirement system.

“I thought this was an issue that was something I should take on because I’d worked in politics and I’d been working in finance.”

Townsend, who addressed ASFA’s recent Adelaide Conference around the 50th year anniversary of her father’s death, is now crusading for a compulsory retirement contribution system in the United States in a bid to improve the dignity of retirees. She hopes it will become a key issue for the next Presidential election in 2020.

“We have a huge crisis in our country,” she says. “What I’m asking for is big change.”

Political and investment genes

It is often forgotten that the Kennedy dynasty is as much an investment dynasty as a political one.

Kennedy Townsend’s grandfather, Joseph Kennedy (Kathleen was the first grandchild), was a legendary Wall Street investor. He once saved the Yellow Cab company from an attack of short sellers, and later became the first chair of the Securities and Exchange Commission (SEC).

His financial speculation morphed into movies and property, including ownership of the giant Chicago Merchandise Mart, and he accumulated a fortune, once estimated by Forbes magazine to be worth $US1.7 billion to $US3.4 billion in today’s money.

Townsend was the eldest child of Robert F Kennedy, who became Attorney-General in his brother, John F Kennedy’s administration, and a famed fighter for civil rights.

Her mother, Ethel Skakel, was also from another successful business family. Townsend’s maternal grandfather, George Skakel, established the Great Lakes Corporation, which became one of the largest private companies in the US.

At the recent ASFA Conference, Townsend described her childhood at the legendary mansion, Hickory Hill, in McLean, Virginia. At the dinner table, she and her ten siblings would be quizzed on current events, and her mother would take them to Senate meetings rather than parks.

Making a difference

Townsend says both her mother and father had a profound influence on her.

“They said, ‘from those who have been given much, much will be expected’,” she says.

While her parents instilled a very strong sense of responsibility, they also inculcated a “very great sense of adventure to climb mountains, to explore the world, to listen to how other people live, to open yourselves to other people’s pain and suffering. And enormous curiosity about what was going on in the world … To read, to think, to ask questions.”

However it was her father’s moral and social crusades against poverty and discrimination that had some of the greatest impact. As Attorney General from 1961 to 1964 he fought entrenched prejudice to improve the civil rights of African Americans and end discrimination.

Townsend studied history and literature at Harvard before completing a law degree at the University of New Mexico School of Law. She then practiced as an attorney after moving back to her husband’s home state of Maryland.

But, in essence, her father had challenged her to follow in his footsteps into politics, once writing to her, “as the oldest of the next generation you have a particular responsibility … Be kind to others and work for your country”.

Townsend ran for the US House of Representatives in Maryland’s second congressional district but lost. In 1994, however, she was elected Lieutenant Governor.

Kennedy Townsend says she is most proud of the social reforms achieved during her time in office. Through her advocacy Maryland became the first (and still only) State to require community service as a condition of high school graduation. She also made a big impact by encouraging police and community leaders to work together and build trust with one another to reduce crime in their communities.

And she brought mental health services, traditionally provided to high school students, to elementary schools.

The US retirement challenge

In 2002 she ran for Governor but lost to Republican Robert Ehrlich. The loss triggered the Kathleen Brown-inspired move into finance. She became managing director of Washington-based investment and advisory firm, Rock Creek Group, where she also worked with a number of the firm’s major clients. She is still involved with the company as a senior adviser.

But then she heard a talk by Randi Weingarten, the president of the American Federation of Teachers, describing the terrible situation for retirees in the US. Some 68 million Americans have nothing saved for retirement. The median income for retirees is $US15,000. Even for the top 1 per cent of income earners, the average retirement savings is $US200,000; for median income earners it is just $US100,000.

Townsend notes that if Americans have no savings in retirement, they rely on Social Security. For almost 50 per cent of American seniors, social security provides at least 50 per cent of their income and for about one in five seniors, Social Security provides at least 90 per cent of their income. The average social security retirement benefit in June of 2018 was just $17,000 per year.

“I thought, this is a really horrendous situation,” Townsend says. “More than 70 per cent of Americans fear retirement more than death, with good reason, because they have so little savings.”

Townsend says there is increased awareness the US needs to solve this problem, largely brought about by a growing baby boomer bulge and changing work patterns. “People don’t work at the same job for 30 or 40 years like they used to. We need a different way of saving.”

She took action. She chaired the Governor’s Retirement Security Taskforce in Maryland, which resulted in legislation that incentivises all businesses not offering a retirement plan to offer an opt-out retirement option for their employees. She is a board member of the entity created by that legislation.

She also founded the Centre for Retirement Initiative at Georgetown University to promote retirement solutions at the state government level.

Townsend says those moves have been important. “But what we really need is federal action to solve the problem,” she says.

She has now launched a national campaign to start a federal-guaranteed retirement account program. It would start with employees contributing 1.5 per cent to a retirement account, with employers matching contributions. Townsend says it will “make sense to escalate the contributions”.

“My goal is to get federal legislation passed so that every American has a way to save for a safe and secure retirement,” she says.

Looking at Australia’s system

Australia’s superannuation system requires employers to make compulsory contributions of 9.5 per cent, with the nation’s super assets totalled $2.8 trillion (at the end of September 2018).

“The Australian model is an extraordinary example of what can be done with visionary leadership and determination,” Townsend says. “I am inspired by what has been accomplished in such a short period of time.”

The Australian model is an extraordinary example of what can be done with visionary leadership and determination

Townsend says when she looks at the Australian superannuation system, three things stand out as impressive.

Firstly, within a generation, and despite being the 16th largest economy, Australia has created the world’s fourth largest retirement savings pool in the world. “That’s impressive,” she says.

Secondly, Australia achieved that as a mandate on employers. And thirdly, “You’ve done this in a way that does not just benefit the wealthy and well-off but you tried to make it help all Australians which is also impressive.”

Townsend says the superannuation system will always be criticised, and she notes the Financial Services. “But don’t lose faith in it because it’s important what you have done and people all over the world are envious, particularly people over 65 are envious of what you’ve been able to accomplish,” she says.

Townsend is particularly focused on creating income streams for Americans during retirement, something the Australian superannuation system is adapting to now as the bulge of baby boomers start to retire.

As part of the system she envisages for the US, “when people retire, we hope they would get a monthly pay cheque for the rest of their life and not a lump sum,” she says. “What people really want is the security of knowing that the money would last till they die.”

This was Townsend’s first trip to Australia. She wants to return to see the Great Barrier Reef, the “wonderful forests”, and Uluru.

But in the meantime she is focused on her retirement campaign.

Townsend says ensuring a financially secure retirement is one of the key roles the finance industry can play in society. “You’ve got to make sure that you’re providing a secure retirement,” she says. “You want to make sure the products that are developed are useful and understandable and helpful.”

Townsend faces a big challenge building an equitable compulsory retirement system in the US.

Her goal is to have the retirement plan become part of the next Presidential campaign in two years. To achieve that, Townsend says it requires organising in the primary states with community and political leaders, as well as grassroots activists.

“I’m talking to both Senators and Members of Congress and hope it will be part of the Presidential Campaign so many Americans will hear about it and realise there is an answer to their fears on retirement, that there is something that can be done.”

But she has strong community support from a cross-section of America. The non-profit think tank, the Economic Policy Institute, where Townsend is director of retirement security, polled 3000 Americans about their attitude towards the retirement plan. Some 75 per cent of Republicans and 75 per cent of Democrats liked the idea, and 86 per cent of millennials were supportive.

The Kennedy legacy

Townsend has her family’s crusading spirit to guide her.

“What I learnt from my family is the importance of courage and compassion and caring. Those of us who are fortunate have a responsibility to make sure we’re making the world a more just and a more loving place.

What I learnt from my family is the importance of courage and compassion and caring. Those of us who are fortunate have a responsibility to make sure we’re making the world a more just and a more loving place

“I learnt that each of us has been given gifts, and each of us should use those gifts to improve the lives of our community and our country and to help others where we can. That can be from speaking out, to voting, to getting involved in a campaign, to volunteering. There are many ways to make a difference, but it’s not enough to sit on the sidelines and stay silent.”

Photography by Jeremy Veitch.