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Inclusive Asset Policies for Women's Economic Success

This report highlights the importance of assets for women's economic well-being and proposes policy recommendations to address wealth inequality and promote asset accumulation. It also discusses the need for low-cost and bold ideas to support women's financial empowerment.

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Inclusive Asset Policies for Women's Economic Success

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  1. Expanding the Middle Class:Paths to Economic Success for Women and Their FamiliesWomen’s Policy, Inc.December 6, 2006 Ray Boshara New America Foundation Washington, DC 202-986-2700 boshara@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. • For all households, wealth inequality is already a middle class problem—and is much more severe than income inequality: QuintileIncomeWealth 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. • 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. • 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. • 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 • Getting defaults right, making saving easy and automatic • Federal, state, and local • Accumulate and protect

  5. Low and Moderate Cost Ideas • Implement “split refunds” and “auto 401(k)s” • Automatic IRA Act (cost not yet known) • Senator Clinton’s bill: • Bank the unbanked • Create “Young Savers Accounts” (Sen. Baucus proposal) • Add college savings to the Savers Credit • Revive and promote Savings Bonds • Improve 529 college savings accounts • Promote asset building and financial education at tax time • Raise asset limits in the Food Stamp Program (Farm Bill) • 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)s • Refundable Savers Credit • Women’s Retirement Security Act 2. Savings Accounts at Birth • ASPIRE Act • Baby Bonds • PLUS Accounts • Others?

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