The general theme of the July/August issues of the Washington Monthly is that whether they are employed or not, middle-class Americans have not been and are not now accumulating the kind of wealth assets that provide economic security or a comfortable retirement. Aside from diagnosing the problem in painful detail, the articles in this package discuss a variety of fairly simple ways to address the problem, if not for today’s near-retirees then for tomorrow’s.
Dana Goldstein, a well-known journalist who’s now a fellow at both the New America Foundation and the Nation Institute, offers an article on one of the most basic asset-building instruments of them all: the savings account. Citing a variety of research showing that having even a small nest egg of savings has an enormous motivating effect on kids–particularly those from low-income families–who are subsequently more likely to undertake and successfully complete higher education, Goldstein argues for a return to the kind of initiatives–such as the “school banks” that were a familiar part of the American landscape until the 1960s–that encouraged savings at a very early age:
One example is San Francisco’s “Kindergarten to College” (K2C) program. It provides savings accounts seeded with $50 to 1,200 five-year-olds at eighteen city schools; the program is expected to eventually expand citywide. KIPP, the highly regarded national charter school network, also launched its own pilot college savings program last year. More than 6,500 current and former KIPP students have been given a savings account in their own name, seeded with a $100 investment financed by the Citi Foundation. Contributions from students or their families are matched dollar for dollar up to $250 per year.
What Goldstein calls the “asset effects” appears to have a greater impact on providing kids with a “sense of personal control and future orientation” than can be measured by the value of the savings themselves. Given the modest amounts of money necessary to “seed” such nest eggs, it’s an approach that’s well worth a major try.