Brief: Low-Income Families Need Help to Boost Savings

by Mark Richardson

AUSTIN, Texas – It’s tough these days for low-income families to set aside money, but a new policy brief from the Annie E. Casey Foundation is urging government leaders to make saving easier.

Beadsie Woo, senior associate with the Casey Foundation, says the federal government needs to develop programs that help families start saving for the future.

“There are common-sense federal policies that can create more opportunities for families to save, and those change the life course for their children,” says Woo.

The policy brief suggests programs such as establishing and seed-funding savings accounts when children are born, or making it easier for employers to provide workplace savings plans.

Woo says minorities have a particularly difficult time saving for the future.

“The racial wealth gap is growing, and that’s putting children of color at a huge disadvantage,” she says. “Policies that make it easier for families to save can go a long way toward helping children have better futures.”

Woo says programs such as Temporary Assistance for Needy Families often cut people off if they have too much in savings. In Texas, the asset limit is just $1,000. She says the limit should be at least $12,000, about a three-month cushion for a low-income family.

OpportunityTexas, a joint initiative of the Center for Public Policy Priorities and the group RAISE Texas, works to develop children’s savings accounts, employer-based savings programs and tax-refund investment plans for low-income families.

OpportunityTexas project coordinator Laura Rosen says such financial backstops can make a real difference in children’s lives.

“There is research that, for kids, when they know they have a cushion and kind of a margin for error, it allows them to dream,” she says. “Gives them confidence to reach their goals and not feel like they are living in crisis mode.”

The Casey Foundation brief also calls for the government to do a better job promoting entry-level retirement accounts called My Retirement Accounts and help more eligible families own homes through the federal Family Self-Sufficiency Program.