ASPIRE Act/KIDS Accounts

America’s personal savings rate is abysmally low. Last year the personal savings rate was negative, the lowest annual rate since the Great Depression. Whether the objective is to promote retirement security, improve educational attainment or increase financial literacy, the need to increase household savings is vitally clear.

To his credit, Mayor Bloomberg challenged his anti-poverty commission to think boldly. Well, how’s this: Every poor New Yorker should have the opportunity to build wealth.

Imagine your life without any assets -- without a bank account, investments, savings, a home, an education, a nest egg for retirement or any money to pass on to future generations. Feels pretty insecure, doesn’t it? Turns out that such "asset poverty" is higher in New York than in any other state in the nation.

Many Oregonians face a personal savings crisis that society cannot afford to ignore. For example, nearly half of households headed by adults 55 or older in our state lack such retirement assets as pensions and annuities. Furthermore, among low-income households in Oregon headed by an adult older than 55, nearly three out of five households (60 percent) are without retirement assets.

Hurricane Katrina graphically showed how many Americans live in abject poverty, one natural disaster away from losing the few assets they have.

But many Iowans have equally few assets to weather a similar financial setback, whether the cause is a natural disaster like Katrina or an economic one, such as losing a job. More than half of households in our state headed by adults 55 and older lack retirement assets, such as pensions and annuities. Among low-income households in Iowa headed by an adult over 55, nearly two out of three households have no retirement assets.

Over 100 people, including key congressional staffers, leaders from the financial community, and policy advocates attended Solutions for Increasing Savings, Ownership and Retirement Security, co-sponsored by the New America Foundation and the Retirement Security Project, in conjunction with the Congressional Savings and Ownership Caucuses.

An unlikely group of legislators, spanning the full political spectrum, is proposing a fresh, long-term response to the challenges of financial education, saving, and retirement security: KIDS Accounts.

By providing every newborn child a savings account at birth, with matching deposits for lower-income children, KIDS Accounts will create a national culture of savings and investing, promote financial education, and encourage life-long asset accumulation

The America Saving for Personal Investment, Retirement, and Education Act (The ASPIRE Act) will provide a KIDS Account for every child born after December 31, 2006. Each account will be endowed with a one-time $500 contribution, and children in households earning below the national median income will be eligible for a supplemental contribution of up to $500. The accounts will be supported by incentives designed to encourage savings, promote financial literacy, and expand asset-building opportunities.

Perhaps a good way to begin debate on President Bush's bold and commendable ideas for an "ownership society" would be to ask, "Who owns America?" After all, if ownership policies further concentrate the ownership of assets for those who already own a lot, while doing little for those who own nothing, what's the point?