Low-Risk Tax-Time Savings for All with U.S. Savings Bonds: Training Presentation

8/8/2019 Low-Risk Tax-Time Savings for All with U.S. Savings Bonds: Training Presentation

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Tax Time Savings

for all with U.S.Savings Bonds:Training Webinar


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A Savings Crisis

Some alarming facts: Americans had stopped saving

in early 2008 our personal savingsrate fell to just 0.1%.

Debt has grown

from 1994 to2008, average family credit carddebt doubled from $4.3k to $9.6k.

Inequality is high the bottom 40% ofAmericans own 5% of the nations wealth.

Vulnerable are hardest hit poorest 25% offamilies have negative net worth.

Finally, a window of opportunity to helppeople save again -the savings rate iscreeping upward as a result of the recession


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Why Saving Matters

Role of Savings:

emergency reserves

for get ahead investments (home,education, retirement)

alternative to costly credit provides sense of security, comfort

Process of Saving:

promotes thinking ahead, prioritizing models behavior for kids

emotional payoff (pride, satisfaction)

No one has everspent his wayout of poverty.

~ Dr. Michael

Sherraden


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But Saving is Hard

Challenges lower-incomesavers face:

Limited income a minimumwage worker makes $15K a year.

Consumerism pressure to buyis everywhere.

Family & friends are often inneed, creating pressure to shareresources.

Few opportunities mostpeople save with structured help(e.g., 401(k) plans), but poorpeople get little or no such help.

Q: How manyAmericanscurrently holdSavings Bonds?

A: 55 Million.(Thats 1 in 6!)


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With Help, Anyone can Save

Some Examples:

In one matched saving test:

2,300 people saved $1.3MM - 2.2%of their income, an average of $550

Almost half lived belowpoverty level;4 in 5 lived below 2x the poverty line

In test of U.S. Savings Bonds:

1,385 VITA tax clients (6%) saved$250k+ in bonds for 2,300 people

Buyers average income: $20K

Average amount saved: $192

$500 invested in a USSavings Bond at 4%for 10 years will growto $743.6

Tax Clients wantto Save

In one study, 49% ofVITA clients agreed:

Iwish that when Ihad

cash, Iwas better

disciplined & saved itrather than spent it.


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A QuickQuiz

Low and moderate income tax filers receive howmuch money eachyear in federal tax refunds?

$100 million (average of $500 per household)

$1 billion (average of $1,000 per household) $100 billion+ (average of $1,680 per household)


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A QuickQuiz

Low and moderate income tax filers receive howmuch money eachyear in federal tax refunds?

$100 million (average of $500 per household)

$1 billion (average of $1,000 per household) $100 billion+ (average of $1,680 per household)7

What might help people

save some of these funds?


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Tax Time Opportunity

Key elements to foster saving:

Funds to Save - $100 billion isreturned to poor families each year

On average, $1,680 per household

Up to 20% of annual income

Assistance tax preparers can serveas trusted helper to suggest saving

Convenience saving at tax timerequires no 2nd step, extra trip to bank

Assistance and guidance

from a trusted taxpreparer is a critical tohelping tax clients saveat tax time


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Something to Consider

For many lower-income clients tax season is the only chance each

year when saving seems possible.

a tax preparer may be the onlyperson all year who asks them tothink about saving.

Most people wont save unless someone

asks them to consider it.

VITA volunteers & staff owe it to their

clients to raise this important topic.

Buying $100 U.S. SavingBonds every year for 20years would leave a taxclient with over $3,000 enough to fill the gaps in a

childs college scholarship.


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A Proposition

How about a Return to Thrift?

culture that supports saving

more families with financial reserves

emphasis on the future, planning

especially critical for working families

But How?

need a secure, trustworthy product

available to all, at key moments

long-term in nature able to be gifted

Did YouKnow?

From 1917-1966, theYMCA and others

sponsored NationalThrift Week, complete

with local ThriftCaptains


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How many Americans own U.S. Savings Bonds?

Over 1 million

Over 10 million

Over 50 million

AnotherQuickQuiz


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Over 1 million

Over 10 million

Over 50 million55,000,000 Americans own savings bonds 1 in 6!

AnotherQuickQuiz


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In the 1960s, tax filers could receive their federalrefund in the form of a savings bond.

True

False

QuickQuiz


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Yes! Heres an example



In the 1960s, tax filers could receive their federalrefund in the form of a savings bond.

True

False

QuickQuiz

1962 Form 1040A

With option to receive refund as U.S. Savings Bond


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Its easy to do on Form 8888

Just complete Part II for

U.S. Savings Bonds

If bonds are for tax filer

just complete Line 4 If bonds are for others,

complete Lines 5 and 6

If beneficiary check

box Enter amounts on RHS

.


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U.S. Savings Bonds Overview

Series I U.S. Savings Bondsan IOU from the US Government:

safe principal protected by fullfaith & credit of U.S. government

accessible buy for as little as $50 smart solid return (.74%), no fees

simple sold at face value ($50buys $50 bond), rate adjusts twice a

year long-term must be held for 1 year

before redemption (cashing in)

portable may be redeemed atmost banks & credit unions

U.S. Savings Bondshave been a

popular, respectedinvestment optionfor over 70 years.


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Important Bond Facts

Redemption (cashing in)

At most banks & credit unions

Requires valid ID

Minimum holding

Must be held for 1 year

If redeemed before 5 years, lose 3months interest

Loss / theft replacement Complete Treasury Form PDF 1048

Get signature certification from bank

Mail to Treasury

Proceeds from SavingsBonds are exempt fromfederal tax if used forsecondary education

(check IRS Publication

970 for details).


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Savings Bonds as Gifts

Tax Clients can buy bonds for:

Themselves

And/or up to three other people

e.g., kids, grandkids, spouses,nieces / nephews, godchildren, etc.

Details

Tax client needs only name of giftrecipient (no SSN)

Client & gift recipient will be listed onbond as co-owners

Either party may redeem bond

In a 2008 study, 68% ofbuyers purchasedsavings bonds for

others, mostly children& grandchildren


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John Q. Saver

123 Main StreetAnywhere,WA 99000-0000

OR Jen Saver

123-45-6789 01 2009

FRB-MPLS

04-15-072

:C000090007 :04 000000000000 C000000000I

Purchasers Social Security Number

Owners Name &Address (Co-Owner Name, if any) Authentication Stamp

Issue Date

Example Savings Bond


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Bond Features & Benefits

Benefits

Reach saving goal sooner

No fees to erode savings

Simple tax site order process saves time

Easy to give savings as a gift

Value not lost as prices rise

Feature

Competitive return (.74%currently)

No fees

Convenient

Can buy for others

Inflation protection

Loss & theft protection Savings are safe


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Bonds vs. Savings Accounts or CDs

Savings Bonds: CD-like returns, no fees and a $50 minimum

Typical SavingsAccount*

Typical 1 YearCertificate ofDeposit (CD)*

Series I U.S.Savings Bond

Rate of Return .17% .53% .74%

Annual Fees $0 $0 $0Minimum to Open $100 $1,000 $50

Rate Fixed No Yes Adjusts bi-annually

Minimum HoldingPeriod

None 1 year 1 year

Early RedemptionPenalty / Forfeiture

None All interest earnedto withdrawal date

3 months interest

(redemptions within 5years of purchase)

ChexSystems Review Yes Yes No

MayBuy as a Gift No No Yes

*Source: National Average rates, www.bankrate.com


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And AnotherQuiz

Which of the following are true about Series IU.S. Savings Bonds:

A. They pay a competitive interest rate (.74% currently).

B. They can be purchased for as little as $50.C. They can only be redeemed where they were purchased.

D. They can be purchased as gifts for anyone else all youneed is the gift recipient's name.


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And AnotherQuiz

Which of the following are true about Series IU.S. Savings Bonds:

A. They pay a competitive interest rate (.74% currently).

B. They can be purchased for as little as $50.C. They can only be redeemed where they were purchased.

D. They can be purchased as gifts for anyone else all youneed is the gift recipient's name.

All of these statements are true exceptletter C.U.S. Savings Bonds can be redeemed at most banks and

credit unions nationwide, not just where they werepurchased.


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Yet AnotherQuiz

How long must savings bonds be held beforethey may be redeemed?

A. 6 months

B. 12 months

C. 5 years

D. They may be redeemed any time


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Yet AnotherQuiz

How long must savings bonds be held beforethey may be redeemed?

A. 6 months

B. 12 months

C. 5 years

D. They may be redeemed any time

U.S. Savings Bonds must be held for at least 12

months before they may be redeemed.Bond buyers should understand that they can notaccess funds saved in bonds for one year after

purchase.


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Finding: People Want to Save

LMI tax clients value saving

49-63% of buyers saved part ofrefund in the past

48% of decliners

Saving is a growing concern


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Finding: People Like Savings Bonds

Pleased with bond purchase

Familiar with bonds

65% of tax clients familiar (vs.32% for IRAs)

63% of tax clients had bought bond,received bond as gift or knownsomeone who has owned


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Finding: Who Saves

Demographics Parents: 70-75% of buyers; grandparents: 4-15%

Gender: 79% female

Age: ~ 40 years, same as sample

Income: average AGI of buyers ~ $20k Ethnicity: African American over represented among buyers;Hispanic slightly under

Other

Large tax refund ($3.4k for buyers vs. $1.7k)

First time savers: as high as 50%


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Finding: How People Decide to Save

When: at point of sale ~50% report deciding to save at tax site

How: human contact

learned about option to buy bonds today

79%+ when someone talked to me

12% from brochure or poster

20% before coming to tax site


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Presenting Savings

Consider Saving requires many tax

clients to take a leap of faith What if they need the money

later? Or their savings

disappear?

Clients generally trust you,their tax preparer or otherVITA staff

You are there at the key

moment when the refundamount is clear

As the face of any savings

offer, your role is critical.

54% of bond purchasersduring the TS 07 pilot, saidthey had no money savedor invested prior to buyingbonds

As tax preparer, YOUplay a crucial role in aclients decision tosave for the future -their own, or that of

their children orgrandchildren.


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Bond OrderProcess

How it Works1. Client chooses to order bond in Part II

of Form 8888

2. Government mails bonds to clients

Your Role(s)1. Explain opportunity- describe

savings bonds & chance to order at taxsite

2. Seek decision ask client to decide if,

how much & for whom to order bonds3. Process order complete IRS

Form 8888 and enter name ofowner and co-owner(s) orbeneficiary and amount for bonds

Tax Preparers Matter

In a 2007 study, 41% oftax clients who saved

part of their refunddecided to do so onlyafter meeting with theirtax preparer.


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Talking with Clients

Bonds are a good fit for

Parents / guardians bonds arepopular gifts for kids

68% of 08 buyers bought bonds for others

First time savers seeking a safeway to start saving

Bonds can be ordered for as little as $50

Long-term savers who want a toolto build savings over time

People on ChexSystemsSM who donot qualify for a bank account

New Savers?

54% of tax clients whobought savings bondsin 2007 said they hadno money saved orinvested prior tobuying bonds.


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Conversation Starters

To raise the topic of saving, tryopen-ended questions:

I see you have a savings bond brochure;have you had a chance to look at it what

do you think? We have a new, free service this year to

help you save; have you heard about it what questions do you have?

Have you ever heard of US savings bonds?

What have you heard?

or- May I tell youabout them?

Do you recall how you used last years taxrefund? What are your plans this year?

When a clientspeaks:

Listen closely

Look her in the eyes

Never interrupt

Consider repeatingback her key points


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Seeking A Decision

To help clients decide aboutbuying bonds:

Answer any questions; tactfully correctany misinformation

Briefly re-state 2 or 3 relevant bondfeatures For example, as I mentioned, bonds are

very safe, available for just $50, and earn.74% right now.

Then ask directly, would you like toorder a savings bond today?

If client declines Politely ask them why

Correct any misunderstandings, ask again

Remember: Saving is hard & many

clients wont say yes.

It is normal for about 1in 10 to order bonds.

Please keep asking

clients about bonds

even if many say no.

Always respect clientschoices, as they knowwhats best for them.


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Possible Client Concerns

Concern: I cant afford to save Response

Even a little is a start; you can begin for $50

You just saved $150 in tax preparer fees -you could save some of this amount

How did you use last years refund? Buy a$50 bond & youll still have some of yourrefund next year

Concern: I dont trust the government Response

55 million Americans hold Savings Bonds

Savings bonds have been sold since 1934

You trust the govt to send your refund

The same department that processes yourrefund issues bonds

During 2007 & 2008pilots, bond purchasesused, on average, 6% oftheir refund to buysavings bonds


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Client Concerns (more)

Concern: Ill save by myself, my own way

Response

Its great you already have a plan to save!

We are offering another saving option that

can save you time & a trip to the bank. Bonds are among the safest saving

options with very competitive returns.

You can buy a bond for your kids, grand-kids or others - bonds make great gifts.

For most of us, if we dont do it nowwemay never do it.

Its free to split your refund and buy abond today.

Q: Does one paystate or localIncome taxes onSavings Bonds?

A: No.


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Another One

Which of the following are good ways to begin aconversation about savings bonds with tax clients?

A. Do you want to buy a savings bond?

B. Have you heard about our new saving option this year? What

questions do you have?C. Has anyone talked with you today about savings bonds? What

do you think about them?


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Another One

Which of the following are good ways to begin aconversation about savings bonds with tax clients?

A. Do you want to buy a savings bond?

B. Have you heard about our new saving option this year? What

questions do you have?C. Has anyone talked with you today about savings bonds? What

do you think about them?

Both letterB & C are good conversation starters.

They are open-ended, non-threatening and will help you learnmore about the clients thoughts and feelings.


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Final Quiz

If a client says Im not interested which of thefollowing is the best way to respond?

A. Fine. How do you want to receive your refund?

B. Why? Savings bonds are a great way to save and saving is

really important.C. Okay, thats fine. Thanks for considering it. It would help me to

understand why you arent interested could you give mesome idea?


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Final Quiz

If a client says Im not interested which of thefollowing is the best way to respond?

A. Fine. How do you want to receive your refund?

B. Why? Savings bonds are a great way to save and saving is

really important.C. Okay, thats fine. Thanks for considering it. It would help me to

understand why you arent interested could you give mesome idea?

Letter C is the best response.It accepts the clients answer but keeps the conversation goingand provides an opportunity to identify and correct anymisunderstandings about savings bonds.


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PLEASE:Askeveryclient who has a refund

If you dont, who will?

Tax time may be a clients only feasible

saving opportunity all year; it may be ayear before they have another chance.

It never hurts to ask; you cant be sure

who will say yes unless you ask!

Everyone deserves a chance to decidefor themselves.

YOU can Encourage Savings Habits

Did you know?81% of those whobought savings bondsin 2007 said they werevery happy with their

purchase!


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Savings is hard. Bonds make it easy

Multiple dimensions: National vs. Local

Offline vs. Online

National media coverage of the campaign

Potential national launch in D.C. Boston and Philadelphia are our launch or

demo cities

Lots of outreach into the communities(consumers, gatekeepers, tax preparers)

Support of elected officials

Local media coverage; PSAs, etc.

Social media and campaign web site


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Multiple delivery mechanisms for training,marketing materials (if youd like them)

Social Media

Facebook, Twitter

Slide Share (for collaborative development,

comments)

Download via web site

Call to action (Join our campaign)

Let us know what assistance you need (marketing,

training)

Technical Assistance Delivery


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Join our Campaign


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Thankyou!

For more information:

visit:Doorways to Dreams (D2D) Fund atwww.d2dfund.org

Preeti Mehta

[email protected]

(617)-541-9065

about Series I U.S. Savings Bonds, visit:

The Bureau of Public Debt atwww.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

Documents

Low-Risk Tax-Time Savings for All with U.S. Savings Bonds: Training Presentation