1. Scaling Up Savings and Savings Policy The Saver’s Bonus and Lessons from $aveNYC

2. Presentation Define savings needs of low-income families Identify how these needs are(n’t) being met by current policy Review The Saver’s Bonus as policy solution

3. The Need Savings are critical for low-families. » Financial Stability  Among families that experience a job loss or health condition that limits the ability to work, 40% of liquid-asset poor families report hardship compared to 20% of families with liquid assets. »Economic Mobility  71% of children born to low-income, high saving parents moved into a higher income quartile over a generation compared to only 50% of children with low-saving parents.

4. The Need Precautionary, flexible use savings particularly important both functionally » “supplementary income” And structurally presents a first rung on the savings ladder

5. The Need Good News: It doesn’t take much to make a difference. » Even amounts below $2,000 have been shown to reduce the likelihood of missing meals or rent payments when income is interrupted. » Children with a savings account in their name, regardless of the amount, are 7 times more likely to enroll in college than children who have no account.

6. The Need Bad News: Most families don’t have enough. » 68% of families in the bottom income quintile are classified as “liquid-asset poor.” Low-income households face barriers when trying to save. »Lack of resources to devote to saving »Lack of institutional support

7. Current Policy Current policy provides a patchwork of supports. »Policies targeting low-income households small in scale The tax code is the primary vehicle. »Benefits accrue primarily to upper-income households »Focused on long-term, restricted uses

8. The Saver’s Bonus NeedDesign Accessible PlatformTax Filing Process Resources for SavingTax Refund Facilitated Account OpeningOpen Account on Tax Form Meaningful Incentive1:1 match on first $500 Flexible UsesRetirement, College, Precautionary

9. The Saver’s Bonus $aveNYC- The Saver’s Bonus in Practice » Incentive: 50% match on initial deposit » Account Opening: On Site » Product: 1 year CD » Savings Purpose: Precautionary, flexible use

10. The Saver’s Bonus Prior to $aveNYC$aveNYC Outcomes $17,900 average income 50% had no savings account 26% had no bank account About 1/3 could not pay a rent or mortgage payment in the past 6 months 87% said all of their money goes to necessities 80% said unexpected expenses made it hard to save 2,165 accounts opened Over 50% of participants contributed more than the maximum amount eligible for the match $561 average savings (before match) 79% saved for the full year term 70% continued saving after the required savings period concluded

11. The Saver’s Bonus Implication of $aveNYC: » Tax time is the right time.  Resources  Access » Access to an account is foundational. » Savings products should support savings needs. » Incentives make saving valuable.

12. The Saver’s Bonus The Take-Aways: » Savings allow families to plan for the future and keep moving forward when the unexpected occurs. » Low-income families often lack the basic building blocks of saving, resources to save and a place to save. » The Saver’s Bonus would help families start saving and keep saving- and $aveNYC shows that it can work!

13. Additional Resources Black, Rachel and Reid Cramer (2011). “Incentivizing Savings at Tax Time: $aveNYC and The Saver’s Bonus.” Washington, DC: New America Foundation. Cramer, Reid (2010). “The Saver’s Bonus: A Proposal to Support Savings by Working Families at Tax Time.” Washington, DC: New America Foundation.

14. Contact Information Rachel Black Policy Analyst, Asset Building Program New America Foundation black@newamerica.net 202-596-3357 www.newamerica.net