Ownership & Assets

Asset Building News Week, June 2-6

June 6, 2014
Publication Image The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include poverty, employment, and retirement.

Using Concepts from the Field of Cognitive Science to Improve Self-Sufficiency Programs

June 4, 2014
Publication Image Maya Brennan with the Center for Housing Policy has published a fascinating new report entitled “Strengthening Economic Self-Sufficiency Programs: How Housing Authorities Can Use Behavioral and Cognitive Science to Improve Programs.” Brennan uses concepts from the fields of behavioral and cognitive science to evaluate strategies public housing authorities (PHAs) and other providers of housing assistance can utilize to better support their low-income participants. This work has the potential to improve the efficacy of programs designed to support increased earnings and broader upward mobility for recipients of housing assistance.
Research from the field of cognitive science helps explain the ways that experiences with “frequent or extended episodes of poverty, trauma, and social bias” affect the decision-making, long-term planning, and other abilities of families receiving rental assistance. Incorporating an awareness of this dynamic into program design at the PHA level therefore can help families participating in programs accomplish their goals and achieve self-sufficiency.
Specifically, the Family Self-Sufficiency (FSS) Program is well-situated to tackle these issues because it has design elements that already reflect an understanding of what kind of support is needed to help families get on track.

Obama's myRA Proposal Needs Flexibility

June 3, 2014
Editor's note: The following is an excerpt from an article published in The Hill on June 3, 2014. To read the full article, please click here.

In this year's State of the Union, President Obama announced his intention to create a new type of savings vehicle for workers who lack coverage through their employers — the myRA or "my Retirement Account." The motivation for the effort was easy enough to see. Changes to the retirement savings landscape over the last 30 years have left far too many workers financially underprepared for their golden years. Pensions have virtually disappeared, and the 401(k)-type plans that were intended to replace them have shifted risk and costs onto individual workers. Today, only about half the workforce is even participating in a plan, let alone saving enough. The reality is that with such poor coverage and low contributions, the transition to a 401(k)-dominated retirement system has become a failed social experiment, one that is exacerbating economic inequalities.

Asset Building News Week, May 26-30

May 30, 2014
Publication Image The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include the case for reparations, savings, and education.

Should We Save Like the Singaporeans Do?

May 29, 2014
Editor's note: This piece originally appeared on New America's Weekly Wonk as part of the series, Globalization’s Canary: Singapore at 50.  In the half-century since its independence, the strategically located city-state has leveraged its access to the global economy, and a number of innovative policies on issues ranging from housing to savings and social cohesion, to become one of the world’s most affluent societies.  As they prepare to celebrate their milestone, Singaporeans are in a reflective mood, taking stock of what’s been accomplished, while also expressing some unease about the sustainability of their current model going forward.  In that same spirit, New America Asset Building Program Director Reid Cramer explores whether Singapore’s innovative savings system could work in the United States.
In recent years, policymakers around the world have begun exploring the potential of asset-based welfare policy. There is a growing recognition that while income facilitates immediate consumption, people move up the economic ladder and become economically secure when they are able to build up a pool of assets that they can deploy productively. The experience of Singapore and their Central Provident Fund (CPF) provides an instructive case study for the potential of this approach. Although it was initially designed as a mandatory savings scheme to facilitate retirement security while minimizing welfare payments, it has evolved into a comprehensive social security savings plan with various pre-retirement uses such as financing healthcare, child development, post-secondary education, home ownership, and asset building.

As an account-based social policy system, the CPF offers instructive lessons for any country, particularly when we begin to break down why it has worked so well. One feature that makes it particularly effective is that everybody is automatically enrolled – so taking initiative or having special knowledge of investments and savings isn’t required. Contributions to the fund are not optional, but the resources that accrue can eventually be accessed by the account holder. And there are incentives to increase participation among those with lower incomes, introducing a degree of progressivity to the program.

A Simple Policy Change To Help More Hungry Kids Eat? Sounds Great. Where Do We Sign Up?

May 27, 2014
Back in September, Marketplace reported that children at a New Jersey elementary school were not served lunch because their school lunch accounts were empty of funds. According to one parent, "There was a room full of kids who were not fed. Some of them did qualify for reduced lunch, which amounted to 40-cents per meal. The principle then informed us that she spoke to parents on the first day of school and that it was their responsibility to make sure their kids are fed." The school district had apparently decided that it could not afford to continue providing its back up meal to kids because they were already running a $200,000 deficit in their lunch program. As Marketplace noted, “In many other states, debt collectors are hired to go after parents with unpaid bills. There is even a debt collection agency that specializes in collecting lunch debt from parents.”
Debt collectors going after parents for lunch money? First graders going without food? This is a mess. It is bad for kids be denied food – health-wise, academically, psychologically, any way you slice it. And yes, while there may indeed be some parents out there who can afford to pay for their children’s lunches and are simply neglecting to do so, the reality is that the cost of kids’ lunches is a real financial burden for many lower-income families.

Asset Building News Week, May 19-23

May 23, 2014
The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include racial inequality, housing, public assistance, and financial inclusion.

Vermont Takes on “The Poverty Trap”

May 15, 2014
Publication Image In the past few months, there’s been a lot of talk about “poverty traps” built into the social safety net. The term is most commonly used to refer to the issue of “benefit cliffs” in TANF and other programs – as families’ incomes go up, their benefits decrease, which arguably creates a disincentive to work, depending on how quickly benefits phase out. One approach? Just cut the programs. But a bill that just passed in Vermont shows what a better—and proven—approach looks like.


MyRA for Renters? Sounds Familiar

May 14, 2014
Josh Barro has an interesting column for the New York Times today on how we can promote savings for renters. Homeownership, he acknowledges, is a method of “forced savings”: “Every month, you write a check to the bank, part of which goes to pay interest, and part of which goes to reduce the balance of your loan. Over time, you own more of the home. In a country that doesn’t save enough, forced saving is a real virtue of owning a home.” Renters miss out on that built-in wealth-building opportunity.
Barro goes on to present a creative idea to help renters save too: “Why not also allow landlords to participate in myRA, with tenants able to roll a retirement savings contribution into their rent checks?” MyRA is a proposal from the Obama administration that would improve access to retirement savings accounts through the workplace for employees who are currently underserved. (MyRA also happens to be the topic of a new policy paper that my colleagues put out this week, which you should read here.)
I agree with Barro that building a savings option into the act of paying rent is a good idea. Automation helps people do something they likely wouldn’t consciously do otherwise. In fact, it’s such a good idea that the federal government has been doing something very similar for over 20 years, through its Family Self-Sufficiency Program.

Solving the Retirement Puzzle with myRAs

May 12, 2014
Publication Image The Asset Building Program released a paper today examining the potential of the Obama Administration’s myRA proposal to provide a meaningful savings opportunity for low- and middle-income Americans. The paper, “Solving the Retirement Puzzle: The Potential of myRAs to Build a Personal Safety Net,” examines the myRA program within the context of other recent policy proposals to address the looming retirement crisis. While many of the recent proposals have promise, they almost uniformly lack one key element to achieving widespread retirement security among low- and middle-income workers: supporting access to flexible resources that can be tapped in an emergency. This is where the myRA proposal stands out: it permits flexible withdrawals.
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