CFED
Stay Informed!
The Inclusive Economy
Savings Bonds are a Smart Move
Posted on 02/07/2011 @ 08:49 AM
Guest Blogger Diane Browning heads the rural retirement Project of the Women’s Institute for a Secure Retirement (WISER) from Lewisburg, West Virginia. She is a 2010 CFED Innovative Idea Champion. This post first appeared as an Op-Ed Commentaries section of the Charleston Gazette:
The parties are over, the holiday lights are coming down and the long slog to spring has begun -- made all the drearier by having to account for last year's income and file taxes.
However, there is a new bright spot in this annual ritual -- the opportunity to build savings at tax time.
The federal policy to facilitate the purchase of a savings bond via a refund was set in place last tax season and has been streamlined for 2011 filings, along with the addition of the option to buy savings bonds as gifts.
In our society, we get a barrage of offers to spend our refund, but how often do you get asked to save it? Yet savings is a key indicator of upward mobility. The Pew Charitable Trust's Economic Mobility Project found that 71 percent of children born to high saving, low-income parents advance economically.
Saving isn't easy, though, no matter what your income bracket. It doesn't seem as difficult when you have extra cash, which many people do at tax time. After paying their payroll taxes, many low-wage workers receive earned income tax credits or child tax credits. Directing some of that refund into a savings bond is smart.
And the U.S. I Bond is a smart savings product. It is purchased at face value for as little as $50, is guaranteed, has an interest rate tied to inflation, a rate competitive with bank CDs (but without the high minimums) and is portable. Most all banks and credit unions redeem them. For people who operate without a checking or bank account, you don't need one to buy a savings bond.
A national pilot program testing the sale of bonds at tax time found that the overwhelming reason people bought bonds was for their children or grandchildren. It is a simple truth that no matter what our station in life, we want our children to prosper. This year, the IRS tax form 8888 allows you to direct part of your refund to
The bonds will be mailed to you about three weeks after you file.
Our economic turmoil in these past few years has had a few upsides. One is being thrifty and saving is "cool" again. By offering a universal and safe savings product at an opportune time to save, it has also become easy. So, as you get ready to see your tax preparer or bravely do your taxes yourself, plan to buy a bond -- and tell your friends and family to buy a bond, too. In the end, it is improving our individual balance sheet with increased assets at the household level that will make our economy sustainable over the long haul.
Copyright © 2012 CFED – Corporation for Enterprise Development 
1200 G Street, NW Suite 400 Washington, DC 20005 202.408.9788
Powered by ARCOS | Design by Plus Three
Comments
Leave a Comment