The Aspen Institute, Initiative on Financial Security, 2007

Among America’s founding principles is the ideal that each citizen’s ability to succeed—to achieve financial security, to do better than the generation that came before—should be as limitless as individual potential.

A sound national savings policy is essential to achieving the American Dream. Policymakers have long identified saving as the key to a secure retirement. But the benefits of saving are far broader. Having the opportunity to save at every point in the life cycle enables people to get an education, to buy a home, to start a business, to sustain them in emergencies—all springboards to financial security and upward mobility.

Higher rates of saving can also strengthen the national economy. Greater household assets can lead to a more educated workforce with more employment opportunities, a key to national productivity in our increasingly global economy.

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Recommendations:

Based on those principles, we have developed a package of four complementary savings vehicles that we believe
can significantly improve the savings options for all Americans:

• Child Accounts to build savings from the beginning of life. All children born in the U.S. would receive a beginning endowment provided by the government to open an investment account. Based on the United Kingdom’s Child Trust Fund, this market-based, retail-sold account product would give every child a financial jump start and help build financial literacy.
• Home Accounts to be used for a down payment on a home. These FDIC-insured accounts would allow more low- and moderate-income families to become homeowners by providing a government match on their savings.
• America’s IRA—standardized, simple Individual Retirement Accounts with a government match for low- and moderate-income Americans who do not have access to retirement plans where they work. America’s IRA would use existing IRA products and distribution channels and would feature a one-time incentive for opening the account.
• Security “Plus” Annuities—basic life annuities to provide an additional layer of lifetime, guaranteed income as a complement to Social Security. It would partner the familiar and universal Social Security program with the private market, and would provide many of the 80 million soon-to-retire baby boomers with a simple, low-cost annuity product that protects them from outliving their savings or losing them in a market downturn.

We believe these savings vehicles can serve as the first steps toward a more sensible system of
saving, for every American.

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