A recent article in the Washington Postⁱ indicated that several initiatives to promote savings beginning at childhood are gaining in popularity. The New America Foundation is at the forefront of uniting one of the most bi-partisan collaborations in the House and Senate today. The ASPIRE Act of 2005 was introduced by Rick Santorum (R-PA) and Jon Corzine (D-NJ). The Act calls for the establishment and funding of a "Kids Account" at birth for every child in America, which they can use after age 18 for going to college, buying a first home, and building up a nest-egg for retirement. This groundbreaking legislation would broaden economic opportunity in America, especially for children from low-income households, while also promoting saving, financial literacy, and integration into the economic mainstream among the next generation.

The SEED Initiative outlined in the September Feature article of EQUITY is yet another project designed to encourage low-income families to saving for their children's future. It is difficult to find fault with either proposal or the ideology behind these incentives. Yet, as illustrated in the EQUITY September Model of the Month article, not all families are able to take part due to policy barriers tied to public benefits programs. While at the State level, headway to change asset restrictions is being made on programs like Medicaid and Temporary Assistance for Needy Families (TANF). Recipients of Supplemental Security Income (SSI) and their children are being denied entry due to the Federal guidelines that control SSI asset restrictions.

The World Institute on Disability's Access to Assets Project provides the following recommendations in order to reduce the inequity and discrimination occurring to families that are attempting to end the cycle of povertyⁱⁱ.

1. Eliminate all asset tests on Supplemental Security Income. The asset restrictions are a primary impediment to individuals wanting to transition off benefits. The asset limitations ($2,000 for an individual, $3,000 for a couple) have remained at the same level since 1989.

2. Eliminate asset tests on structured savings vehicles. Currently, only Federally-funded Individual Development Accounts (IDAs), defined pension plans (not 401(k)s), and limited business resources do not count as assets under SSI rules (also excluded are one home of residence and one car used for work or medical appointments).

We recommend that all savings accounts that have limited access (meaning that penalties occur with early withdrawal) be excluded from SSI asset calculations. These include all IDAs (regardless of funding), Education Savings Plans, all retirement accounts-IRAs and 401(k)s, etc… We advocate that the test that the Social Security Administration adopt for calculating assets be based on what the individual (or family) has readily available and is used for routine expenses.

i Goldstein, Amy. August 20, 2005. "Initiatives to Promote Savings from Childhood Catching On" Washington Post, Page A01. http://www.washingtonpost.com/wp-dyn/content/article/2005/08/19/AR2005081901520.html

ii For more information and recommendations for reform of asset tests for more public benefits programs, see:
To Save, or Not to Save? (PDF) http://www.newamerica.net/Download_Docs/pdfs/Doc_File_2411_1.pdf
By Leslie Parrish, New America Foundation, 05/31/2005