Retirement Security

by Jay Pelosky

Very powerful piece by Martin Wolf in the Financial Times. Day to day market fluctuations are one thing, but the search for growth may well be the next big thing in financial markets – we have had the search for yield (and it is ongoing); we are entering the search for growth. Wolf's analysis is convincing and worrisome.

Though the Assets Learning Conference is now more than a week past, one session that has stuck with me dealt with The Great Recession and its Impact on Wealth in Low-Income Communities and Communities of Color. Through deftly interwoven presentations from the Urban Institute, Woodstock Institute, and Ohio State University (moderated by the U.S.

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include the latest on poverty data, health and financial security.

Editor's Note: This edition of Asset Building News Week was authored by our new fall intern, Elliot Schreur. Elliot is a Master's of Public Policy student at the George Washington University here in D.C. Please join us in welcoming Elliot!

Last week on Washington Post's Wonkblog, Suzy Khimm reviewed a recent report from the National Bureau of Economic Research (NBER) that examines the asset holdings of elderly households near the end of life. The paper "Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and AHEAD Cohorts" relies on data from the Health and Retirement Study and includes the striking finding that 46.1% of people in the study died with less than $10,000 in total assets, many with nothing more than their Social Security benefits.

As Khimm notes, the problem with low asset levels in old age is similar to the problem with low assets at any age: the inability to weather unexpected events. Asset poverty (defined as net worth low enough that a person cannot subsist at the poverty level for 3 months without income) is an all too common impediment to enjoying a comfortable retirement and old age. Low net worth is not just uncomfortable: the data presented here indicate that people with less wealth actually die sooner than those with more wealth. As the study reads, "there is a strong correspondence between the level of assets in 1993 and the number of yeras a person survives after 1993." In other words, higher levels of net worth (or wealth) are correlated with longevity.

Yesterday, Phil Longman and Dana Goldstein spoke with Minnesota Public Radio about their recent contributions to the July/August issue of the Washington Monthly. The issue, The Future of Success, features a package of articles looking at a range of innovative ways to incorporate asset-based ideas into U.S. policy with an eye toward improving economic security for low- and middle-income Americans.

The Asset Building Program hosted an event Wednesday, July 11 to release the July/August issue of the Washington Monthly. The issue focuses on the importance and applicability of the asset building agenda in the lives of all Americans. Utilizing the magazine's focus as a frame for the event, our panelists tackled critical themes such as savings as a path to higher education, the importance of life-long savings mechanisms, the role of federal policies in promoting prosperity, and a growing political divide between young and old Americans.

Over the course of the last two decades, a community of academics, policy wonks, and practitioners has been busy developing and testing ideas for helping ordinary people to save more and build their assets. Here are a few of the signature proposals of what has come to be known as the asset-building movement.

The federal government spends more than $500 billion a year on policies designed to help individuals acquire or build assets. The three most expensive of these policies—the mortgage interest deduction, the property tax deduction, and preferential rates on capital gains and dividends—together deliver 45 percent of their benefits to households with average income exceeding $1 million.

Never before in history has the great American middle class obsessed so much over financial planning as during the last forty years or so. In the 1970s, this obsession fueled the growth of hot new magazines like Money and TV shows like Louis Rukeyser’s Wall $street Week. By the 1980s, it had led to the creation of personal finance sections in almost every newspaper, and to myriad radio talk shows counseling Americans on what mutual funds to buy, how much they should put into new savings vehicles like Individual Retirement Accounts or Keoghs, and how to manage their new 401(k) plans.

Wednesday July 11^th, the Asset Building Program will be hosting an event focused on the special July/August issue of the Washington Monthly. "The Future of Success" takes a look at current economic conditions, how we got here, the impact of the recession on the wealth of American families, and how we might get out. The editors and writers of the Monthly have taken the asset building perspective to heart and decided that it is a critical tool for restoring the American Dream. The event will feature two panels, one comprised of contributors to the issue, the other of expert commentators on the issues at hand.