1. Expanding the Middle Class: Paths to Economic Success for Women and Their Families Women’s Policy, Inc. December 6, 2006 Ray Boshara New America Foundation Washington, DC 202-986-2700 boshara@newamerica.net boshara@newamerica.netboshara@newamerica.net www.newamerica.net www.AssetBuilding.org

2. Rationale for Inclusive Asset Policies Assets are key to economic well-being and advancement, and there are important “asset effects” not necessarily associated with income. Assets are key to economic well-being and advancement, and there are important “asset effects” not necessarily associated with income. For all households, wealth inequality is already a middle class problem—and is much more severe than income inequality: For all households, wealth inequality is already a middle class problem—and is much more severe than income inequality: Quintile IncomeWealth Bottom 40%10%1% Bottom 60%23%4.5% Top 20%56%83% 71.2% of female-headed households are “asset poor,” compared to 42% for married or male-headed households. 71.2% of female-headed households are “asset poor,” compared to 42% for married or male-headed households. Two-thirds of women over 65 have no pension other than Social Security; average benefits were $7,452 a year, just barely above the official poverty level for older adults. Only 13 percent of women 65 and older currently receive a traditional pension; the median pension was $3,000 per year. Two-thirds of women over 65 have no pension other than Social Security; average benefits were $7,452 a year, just barely above the official poverty level for older adults. Only 13 percent of women 65 and older currently receive a traditional pension; the median pension was $3,000 per year.

3. What Have We Learned? The poor can save and build assets. The poor can save and build assets. Saving and asset accumulations are less of function of “preferences” and more a function of access to “structured” savings mechanisms or “plans” (401(k) plan, Thrift Savings Plan, etc.). Saving and asset accumulations are less of function of “preferences” and more a function of access to “structured” savings mechanisms or “plans” (401(k) plan, Thrift Savings Plan, etc.). “Asset effects” are in fact supported by research, are earlier, and are often more powerful than predicted. “Asset effects” are in fact supported by research, are earlier, and are often more powerful than predicted. Small changes to existing systems and products can yield large results. Small changes to existing systems and products can yield large results.

4. U.S. Policy Agenda “Two track” agenda—pursue low-cost ideas while laying the foundation for bolder ideas “Two track” agenda—pursue low-cost ideas while laying the foundation for bolder ideas Getting defaults right, making saving easy and automatic Getting defaults right, making saving easy and automatic Federal, state, and local Federal, state, and local Accumulate and protect Accumulate and protect

5. Low and Moderate Cost Ideas Implement “split refunds” and “auto 401(k)s” Implement “split refunds” and “auto 401(k)s” Automatic IRA Act (cost not yet known) Automatic IRA Act (cost not yet known) Senator Clinton’s bill: Senator Clinton’s bill: Bank the unbankedBank the unbanked Create “Young Savers Accounts” (Sen. Baucus proposal)Create “Young Savers Accounts” (Sen. Baucus proposal) Add college savings to the Savers CreditAdd college savings to the Savers Credit Revive and promote Savings BondsRevive and promote Savings Bonds Improve 529 college savings accountsImprove 529 college savings accounts Promote asset building and financial education at tax timePromote asset building and financial education at tax time Raise asset limits in the Food Stamp Program (Farm Bill) Raise asset limits in the Food Stamp Program (Farm Bill) Expand Individual Development Account via the Savings for Working Families Act Expand Individual Development Account via the Savings for Working Families Act

6. Bolder, Larger Cost Ideas Need big money on the table—Social Security reform, budget deal, estate tax, tax reform, etc. Two main possibilities: 1. Retirement Security Universal 401(k)sUniversal 401(k)s Refundable Savers CreditRefundable Savers Credit Women’s Retirement Security ActWomen’s Retirement Security Act 2. Savings Accounts at Birth ASPIRE ActASPIRE Act Baby BondsBaby Bonds PLUS AccountsPLUS Accounts Others?Others?