Build Household Assets
Family economic success requires that households build assets to increase net worth. Asset building requires both the ability to weather periodic economic storms and long-term savings.
What Can Policymakers Do?
Long-term family economic success can be built through policy support in three key areas:
Improving homeownership options- Many people view owning a home as a key component of the American Dream. A home is often a family’s greatest (and sometimes only significant) asset. A high proportion of lower- and middle-income households’ net worth is home equity. Homeownership is not for everyone, but saving for then purchasing a home is often a valuable asset-building strategy.
Building college savings- A college degree may not be a tangible asset, but it can be one of the most valuable asset a person has. Completing higher education represents an investment in human capital that can provide a lifelong return. College is not for everyone, but it is a valuable asset-building strategy for many. One of the greatest barriers to obtaining a college education is its high cost, so building savings is essential.
Facilitating savings for the future- Fewer and fewer households are going to be able to rely on a pension or other guaranteed benefit to supplement Social Security and provide for a financially-secure retirement. Workers and their families need to take action to build retirement savings over time. Tax time presents an opportunity to encourage and increase retirement savings through incentive programs. A large randomized experiment in St. Louis found that matched incentives to lower-income workers for contributions to Individual Retirement Accounts offered in conjunction with tax return preparation had a meaningful impact on savings behavior.[i]
[i] Esther Duflo, William Gale, Jeffrey Liebman, Peter Orszag, and Emanuel Saez. Savings Incentitves for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block. Washington, DC: Retirement Security Project (2005).
Household Assets Data. The Assets and Opportunity Scorecard provides, on a state-by-state basis, both key data points regarding current asset ownership and assessments of relevant public policies.