Flexible Savings: The Missing Foundation for Financial Security and Economic Mobility

Reid Cramer, Justin King and Elliot Schreur

Flexible savings allow families to manage unexpected financial emergencies and ultimately help families build long-term financial security. However, as this new report from the New America Asset Building Program highlights, flexible savings opportunities are limited, prompting many low-income families to take out payday loans or to incur financial penalties for early withdrawals from their tax-preferred accounts. The authors make several recommendations to broaden the offering of financial services and policies that both permit short-term use and help build assets in the long term. Proposals include eliminating asset limits in public assistance programs, creating a tax-time match for savings deposits, and expanding ownership of ROTH IRA-like accounts.

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